1. Members shall ensure that their sanitary or phytosanitary measures
are adapted to the sanitary or phytosanitary characteristics of the area
— whether all of a country, part of a country, or all or parts of
several countries — from which the product originated and to which the
product is destined. In assessing the sanitary or phytosanitary
characteristics of a region, Members shall take into account, inter
alia, the level of prevalence of specific diseases or pests, the
existence of eradication or control programmes, and appropriate criteria
or guidelines which may be developed by the relevant international
organizations.

2. Members shall, in particular, recognize the concepts of pest- or
disease-free areas and areas of low pest or disease prevalence.
Determination of such areas shall be based on factors such as geography,
ecosystems, epidemiological surveillance, and the effectiveness of
sanitary or phytosanitary controls.

3. Exporting Members claiming that areas within their territories are
pest- or disease-free areas or areas of low pest or disease prevalence
shall provide the necessary evidence thereof in order to objectively
demonstrate to the importing Member that such areas are, and are likely
to remain, pest- or disease-free areas or areas of low pest or disease
prevalence, respectively. For this purpose, reasonable access shall be
given, upon request, to the importing Member for inspection, testing and
other relevant procedures.

B. Interpretation and Application of Article 6

1. General

345. In Australia — Salmon, Australia claimed that the Panel
made an implicit finding of inconsistency of the Australian measure with
Article 6, although the Canadian request for the establishment of a
panel had not included a claim under
Article 6. The Appellate Body
rejected Australia’s argument:

“Canada’s request for the establishment of a Panel did not
include a claim of violation of Article 6 of the SPS Agreement.
The Panel’s terms of reference are determined by Canada’s request
for the establishment of a Panel. We, therefore, agree with Australia
that Article 6 of the SPS Agreement is not within the terms of
reference of the Panel. However, we disagree with Australia that the
Panel exceeded its terms of reference in quoting Article 6.1 in a
footnote, attached to a paragraph in which the Panel examined a
violation of Article 5.5. More precisely, we reject Australia’s
contention that the Panel, by merely referring to Article 6.1
in a
footnote, made an implied finding of inconsistency with Article
6. In
our view, the statement of the Panel with regard to Article
6, in
footnote 430 of its Report, is similar in character to the statement of
the Panel in United States — Shirts and Blouses, with regard to
the powers of the Textile Monitoring Body (‘TMB’). India appealed
from this statement, but we found it to be ‘purely a descriptive and
gratuitous comment providing background concerning the Panel’s
understanding of how the TMB functions’.(427) We did not consider that
statement to be ‘a legal finding or conclusion’ which the Appellate
Body ‘may uphold, modify or reverse’. Likewise, we consider that in
this case, the Panel’s statement in footnote 430 of its Report
regarding Article 6.1 of the SPS Agreement is a purely gratuitous
comment and not ‘a legal finding or conclusion’. By making such a
comment, the Panel did not exceed its terms of reference.”(428)

2. Guidelines to further the practical implementation of Article 6

(a) General

346. At its meeting of 2–3 April 2008, the SPS Committee adopted
guidelines to further the practical implementation of Article
6.(429)

347. The guidelines are intended to provide assistance to Members by
improving transparency, exchange of information, predictability,
confidence and credibility between importing and exporting Members. The
Committee however noted that the guidelines are not intended to
duplicate the technical and administrative guidance provided to members
by the International Plant Protection Convention (IPPC) and the World
Organisation for Animal Health (OIE).(430)

348. The guidelines neither add to nor detract from the existing
rights and obligations of the Members under the SPS Agreement or any
other WTO Agreement.(431)

349. Importing Members are encouraged to publish the basis for
recognition of pest- or disease-free areas and areas of low pest or
disease prevalence and a description of the general process used
including the information generally required to evaluate such requests.

350. Members are asked to proceed with a recognition process without
undue delay and urged to apply the process without discrimination
between Members while maintaining transparency in all aspects of the
process.

351.
Importing Members should take into account any relevant
knowledge of and prior experience with the authorities of the exporting
Member. Upon request from the exporting member, an importing Member
should provide information on the stage of the exporting Member’s
request within its evaluation process.

352. The importing Member should also, upon request, enter into
discussions with the exporting Member with the aim of clarifying the
importing Member’s general process and the information generally
required to facilitate a request for recognition. The discussions should
be undertaken within a reasonable period of time, and normally within 90
days of a request or as otherwise mutually decided. The clarifications
made in the course of the discussions should, if necessary, be
appropriately recorded by the importing Member and transmitted to the
exporting Member to avoid any misunderstandings of the general process.(433)

353. The Committee stresses that Members have the sovereign right to
determine their own process for the evaluation of recognition requests.
However, a typical process would generally involve the following steps:(434)

(a) Step 1: the exporting Member requests information about the
importing Member’s requirements and procedures for the evaluation of
recognition requests;

(b) Step 2: the importing Member explains its requirements and
procedures;

(c) Step 3: the exporting Member sends the documentation
demonstrating compliance with the requirements laid down by the
importing Member;

(e) Step 5: the exporting Member provides any clarification,
additions or modifications requested by the importing Member;

(f) Step 6: the importing Member evaluates the additional information
and, where necessary, steps 4 and 5 are repeated;

(g) Step 7: if applicable, the importing Member carries out on-site
verification of the information provided in support of the recognition
request and sends a report on the on-site verification to the exporting
Member;

(h) Step 8: the exporting Member responds to the inspection report;

(i) Step 9: the importing Member makes a decision to either recognize
or not recognize the pest- or disease-free area or area of low pest or
disease prevalence. Where the decision is negative, the importing Member
should provide the exporting Member the technical grounds for its
determination to allow the exporting Member to modify and adapt its
system with a view to future requests for recognition. Where the
decision is positive, the importing Member then takes steps to
facilitate trade from the exporting Member.

354. The guidelines also provide for an expedited process that
permits the Members to skip one or more steps discussed in paragraph 353
above. In determining the possibility of applying an expedited process,
the importing Member should take into account the following factors(435):

(a) when there has been official recognition of an area as a pest- or
disease-free area or an area of low pest or disease prevalence by a
relevant international organisation;

(b) when there has been an outbreak in an area previously recognized,
and suspended by the importing Member as a pest- or disease-free area or
an area of low pest or disease prevalence, and which has been restored
to its former status as determined by the importing Member;

(c) when the infrastructure and operation of the responsible
veterinary or phytosanitary service of the exporting Member are familiar
to the importing Member as a result of existing trade relations; or

(d) when there has been no previously notified occurrence of the pest
or disease and the importing Member agrees that the surveillance
procedures and activities implemented by the exporting Member have shown
the non-existence thereof.

Members shall notify changes in their sanitary or phytosanitary
measures and shall provide information on their sanitary or
phytosanitary measures in accordance with the provisions of Annex
B.(436)

B. Interpretation and Application of Article 7

1. Scope of application

355. In Japan — Agricultural Products II, the Panel
concluded that: “Japan, by not having published the varietal testing
requirement, acts inconsistently with its obligations under paragraph 1
of Annex B of the SPS Agreement and, for that reason, with its
obligations contained in Article 7 of that
Agreement.”(437) Japan
appealed the Panel’s ruling arguing that the “regulations”
referred to in Annex B(1) are limited to legally enforceable
instruments. Japan contended that the measure at issue (a varietal
testing requirement, as set out in the Experimental Guide) was not a
legally enforceable instrument and as such, fell outside the scope of Annex B(1). In rejecting this appeal, the Appellate Body noted that the
list of instruments contained in the footnote to Annex B(1)
is not
exhaustive in nature.(438) The Appellate Body then concluded that the
measure at issue was a phytosanitary regulation within the meaning of
paragraph 1 of Annex B(1), and upheld the Panel’s finding that Japan
had acted inconsistently with Annex B(1) and consequently, with
Article
7 of the SPS Agreement.(439) See also
paragraph 539 below.

356. The Panel in Japan — Apples relied on the standard set in
Japan — Agricultural Products II and ruled that the measure at
issue in that dispute was also a phytosanitary regulation within the
meaning of Annex B(1) and as such, was to have been published promptly
in such a manner to enable interested Members to become acquainted with
them. The Panel reiterated the obligation of Members to promptly publish
their phytosanitary regulations pursuant to Article 7 and Annex B of the
SPS Agreement.(440)

357. In Japan — Apples, the Panel established a test, to
determine whether changes made to the two instruments at issue in that
case, which were subsequent to the entry into force of the SPS
Agreement, should have been notified under Article
7, having regard to
the two requirements under Annex B(5) of the SPS
Agreement. Annex B(5)
foresees the notification of SPS regulations if a number of conditions
are cumulatively met, i.e.: (a) where a relevant international standard
does not exist or the content of the proposed measure is not
substantially the same as the content of an international standard,
guideline or recommendation, and (b) if the regulation may have a
significant effect on trade of other Members.(441) In this case, an
international standard did not exist for the subject matter at issue.
The Panel therefore was tasked with determining whether changes in the
two instruments constituted changes that were to be notified under
Article 7 because they may have a “significant effect on trade of
other Members”. The Panel applied a two-pronged test: (a) weighing the
impact of the alleged changes in the measures on the conditions of
market access, that is, would the exported product still be permitted to
enter Japan if they complied with the prescription contained in the
previous regulations; (b) if this is not the case, the Panel had to
consider whether the change could be considered to potentially have a
significant effect on the trade of other Members:

“[W]e must determine whether the changes identified above
constitute changes which are required to be notified under Article 7
because, inter alia, they ‘may have a significant effect on
trade of other Members’ in the context of the chapeau to Paragraph 5
of Annex B.

We consider that the most important factor in this regard is whether
the change affects the conditions of market access for the product
concerned, that is, would the exported product (apple fruit from the
United States in this case) still be permitted to enter Japan if they
complied with the prescription contained in the previous regulations.(442)
If this is not the case, then we must consider whether the change could
be considered to potentially have a significant effect on
trade of other Members. In this regard, it would be relevant to consider
whether the change has resulted in any increase in production, packaging
and sales costs, such as more onerous treatment requirements or more
time consuming administrative formalities.”(443)

358. In EC — Approval and Marketing of Biotech Products, on
the basis of its finding that a generally applicable measure concerning
the administration or operation of an SPS measure is not an SPS measure per
se and therefore need not be published, the Panel ruled out
notification requirements for this category of measures:

“Article 7
… requires Members to notify changes in their ‘SPS measures’ and
provide information on their ‘SPS measures’. It does not require
Members to notify changes in the administration of SPS measures and
provide information on the administration of their SPS measures.”(444)

2. Notification requirements

(a) Obligation to “provide information on SPS measures”

359. The Panel in EC — Approval and Marketing of Biotech
Products, on determining the measures at issue under Article 6.2 of
the DSU, considered the purpose of Article 7 and provided an outlook on
whether the general reference to this provision, in the case at hand,
could amount to a violation of the totality of the requirements under
Annex B:

“Article 7 of the SPS Agreement imposes an obligation on
Members to notify changes in SPS measures and to provide information on
SPS measures in accordance with the provisions of Annex B of the SPS
Agreement. Regarding the obligation to ‘provide information’ on
SPS measures, we note that the Complaining Parties have specified in
their Panel requests which particular provisions of Annex B they
consider to have been violated. We therefore think it is clear that the
reference to Article 7 cannot be taken as an indication that the
Complaining Parties are alleging violations of all provisions of Annex B.”(445)

(b) Obligation to “notify changes” in SPS measures

360. The Panel in Japan — Apples, in interpreting the
provisions under Article 7, ruled that “Article 7 of the SPS Agreement
requires Members to notify ‘changes’ in their SPS measures”(446) and
added on a further ground that it does “not believe that changes of
legal instruments require, in all instances, notification.”(447)

361. In EC — Approval and Marketing of Biotech Products, in
the context of identifying the particular measures at issue, the Panel
clarified the content of the obligation to “notify changes in SPS
measures” provided under Article 7. The Panel ruled “that that
obligation is very similar in nature to the other obligation set out in Article
7, that is to say, the obligation to ‘provide information’
on SPS measures in accordance with Annex B.”(448)

3. Recommended notification procedures

362. At its meeting of 29–30 March 1995, the SPS Committee adopted
notification procedures recommended by the informal contact group,
subject to certain conditions.(449) At its meeting of 29–30 May 1996,
the SPS Committee revised the notification procedures to be followed for
notifications required under paragraphs 5 and 6 of Annex
B.(450) Further,
at its meeting of 10–11 March 1999, the SPS Committee again revised
the notification procedures.(451) Another revision of the notification
procedures was carried out by the SPS Committee at its meeting of 2
April 2002.(452) The notification procedures were revised again on 20 June
2008.(453)

363. At its meeting of 26 October 2001, the SPS Committee adopted the
following provision relating to the notification of the conclusion of
equivalence agreements between Members further to the Decision on
Equivalence (see paragraphs 106–118
above):

“The Committee on Sanitary and Phytosanitary Measures shall revise
its recommended notification procedures to provide for the notification
of the conclusion of agreements between Members which recognize the
equivalence of sanitary and phytosanitary measures.(454) Furthermore, the
procedures shall reinforce the existing obligation in paragraph 3(d) of
Annex B of the Agreement on the Application of Sanitary and
Phytosanitary Measures for national Enquiry Points to provide
information, upon request, on the participation in any bilateral or
multilateral equivalence agreements of the Member concerned.”(455)

364. At its meeting of 27 October 2004, the SPS Committee adopted a
procedure to “Enhance Transparency of Special and Differential
Treatment in Favour of Developing Country Members”.(456) This procedure
provides for an addendum of a notification to be circulated with
information regarding the provision of special and differential
treatment or technical assistance, and the SPS Committee adopted a
format for such addenda.(457) This procedure was revised on 18 December
2009.(458)

4. Recommended procedures for implementing the transparency
obligations of the SPS Agreement(459)

365. At its meeting of 20 June 2008, the SPS Committee adopted the
revised Recommended Procedures for Implementing the Transparency
Obligations of the SPS Agreement (Article 7).(460) In the light of the
required modifications to the SPS Information Management System (SPS
IMIS), these procedures, including the revised notification formats, did
not take effect until 1 December 2008.

366. The Committee noted that the term “transparency” is used in
the context of the WTO to signify one of the fundamental principles of
its agreements: the aim is to achieve a greater degree of clarity,
predictability and information about trade policies, rules and
regulations of Members. In implementing this concept, Members use
notifications. Under the SPS Agreement, notifications are used to inform
other Members about new or changed regulations that may significantly
affect their trading partners. The Committee noted that these procedures
were developed to assist Members to fulfil their transparency
obligations under Article 7 and Annex B of the SPS Agreement regarding
the notification of SPS regulations, answering information requests
under the National Enquiry Point System and publishing regulations.(461)

367. The guidelines neither add to nor detract from the existing
rights and obligations of the Members under the SPS Agreement or any
other WTO Agreement. The Committee also stressed that these guidelines
do not SPS Agreement itself.(462)

368. Pursuant to
paragraph 10 of Annex B of the SPS Agreement, the
Committee noted that Members are obliged to designate a “single
government authority” as responsible for the implementation at the
national level of the provisions concerning notification procedures.(463)

370. When a regulation contains both SPS and TBT measures, it should
be notified according to both the SPS and TBT Agreements, preferably
with an indication of which parts of the regulation fall under the SPS
Agreement and which part falls under the TBT Agreement.(464)

371. The recommended procedures also provided formats for routine
notifications as well as for emergency notifications, and their
respective addenda, corrigenda and revisions.

Members shall observe the provisions of
Annex C(465) in the operation
of control, inspection and approval procedures, including national
systems for approving the use of additives or for establishing
tolerances for contaminants in foods, beverages or feedstuffs, and
otherwise ensure that their procedures are not inconsistent with the
provisions of this Agreement.

B. Interpretation and Application of Article 8

1. General

373. In EC — Approval and Marketing of Biotech Products, the
United States and Canada argued that the European Communities’ general
moratorium on approving applications to place genetically modified
organisms on the market in the European Communities violated Article 8
because the European Communities had not abided by the provisions of
Annex C(1). The Panel found that a failure to observe the provisions of
Annex C implies a breach of Article 8:

“We recall that the United States and Canada seek to establish an
inconsistency with Article 8 of the SPS Agreement on the basis of an
inconsistency with Annex C(1)(a). Article 8 requires, inter alia, that
Members observe the provisions of Annex C in the operation of their
approval procedures. It follows that a failure to observe the provisions
of Annex C(1)(a) implies a breach of Article
8. We have determined above
that, as a result of the general de facto moratorium on approvals, the
European Communities has failed, in at least one approval procedure
conducted under Directives 90/220 and 2001/18, to observe the provisions
of Annex C(1)(a), first clause. Accordingly, we conclude that in respect
of the aforementioned approval procedure, the European Communities has,
by implication, also acted inconsistently with the provisions of Article
8.”(466)

374. The Panel in US — Poultry (China) observed that
Article
8 and Annex C(1) apply to the procedures dealing with control,
inspection and approval “which are aimed at checking and ensuring the
fulfilment of SPS measures”.(467)

376. In EC — Hormones, the Appellate Body found that the
language of Articles 5.2 and 8 and the
footnote to Annex C is amply
sufficient to authorize the taking into account of risks arising from
failure to comply with the requirements of good veterinary practice in
the administration of hormones for growth promotion purposes, as well as
risks arising from difficulties of control, inspection and enforcement
of the requirements of good veterinary practice. The Appellate Body
disagreed with the Panel’s suggestion that exclusion of risks
resulting from the combination of potential abuse and difficulties of
control is justified by distinguishing between “risk assessment” and
“risk management”. The Appellate Body noted that the concept of “risk
management” is not mentioned in any provision of the SPS Agreement
and, as such, cannot be used to sustain a more restrictive
interpretation of “risk assessment” than is justified by the actual
terms of Article 5.2, Article 8 and
Annex C of the SPS Agreement.(468) The
Appellate Body relied on this view in its evaluation of the term “risk
assessment” in US/Canada — Continued Suspension.(469)

1. Members agree to facilitate the provision of technical assistance
to other Members, especially developing country Members, either
bilaterally or through the appropriate international organizations. Such
assistance may be, inter alia, in the areas of processing
technologies, research and infrastructure, including in the
establishment of national regulatory bodies, and may take the form of
advice, credits, donations and grants, including for the purpose of
seeking technical expertise, training and equipment to allow such
countries to adjust to, and comply with, sanitary or phytosanitary
measures necessary to achieve the appropriate level of sanitary or
phytosanitary protection in their export markets.

2. Where substantial investments are required in order for an
exporting developing country Member to fulfil the sanitary or
phytosanitary requirements of an importing Member, the latter shall
consider providing such technical assistance as will permit the
developing country Member to maintain and expand its market access
opportunities for the product involved.

B. Interpretation and Application of Article 9

377. At the Doha Ministerial Conference, Members resolved to “provide,
to the extent possible, the financial and technical assistance necessary
to enable least-developed countries to respond adequately to the
introduction of any new SPS measures which may have significant negative
effects on their trade.”(470)

378. At the same Ministerial Conference, Members also decided to
ensure a level of technical assistance necessary to enable
least-developed countries to respond to the special problems they face
in implementing the SPS Agreement.(471)

1. In the preparation and application of sanitary or phytosanitary
measures, Members shall take account of the special needs of developing
country Members, and in particular of the least-developed country
Members.

2. Where the appropriate level of sanitary or phytosanitary
protection allows scope for the phased introduction of new sanitary or
phytosanitary measures, longer timeframes for compliance should be
accorded on products of interest to developing country Members so as to
maintain opportunities for their exports.

3. With a view to ensuring that developing country Members are able
to comply with the provisions of this Agreement, the Committee is
enabled to grant to such countries, upon request, specified,
time-limited exceptions in whole or in part from obligations under this
Agreement, taking into account their financial, trade and development
needs.

4. Members should encourage and facilitate the active participation
of developing country Members in the relevant international
organizations.

B. Interpretation and Application of Article 10

1. General

379. In 2003, the SPS Committee adopted in principle a proposal by
Canada to enhance the transparency of special and differential
treatment, subject to elaboration of the procedure (hereinafter “the
Procedure”).(472) Following discussions on this elaboration in the
Committee meetings in March and June 2004, at the October meeting, the
Committee adopted the procedure.(473)
The Procedure provides that if a
Member with an interest in exporting the products affected by a
notification identifies a concern with the content of a notification,
the exporting Member may request an opportunity to discuss and resolve
the potential difficulty with the notifying Member. Upon receipt of a
written request, the notifying Member is to enter into bilateral
discussions with the exporting Member with a view to resolving the issue
of concern.(474) When a decision is taken on whether and how special and
differential treatment may be provided, the notifying Member should
submit an addendum to its original notification which indicates:

“(1) if special and differential treatment was requested; (2) the
name(s) of Member(s) that requested special and differential treatment;
(3) if special and differential treatment was provided, the form of such
treatment; and (4) if not provided, the Addendum shall indicate why
special and differential treatment was not provided and whether
technical assistance or any other solution was found to address the
identified concern.”(475)

380. On 1 February 2006, the Committee decided to extend the
Procedure and to review its implementation no later than at its first
regular meeting in 2008, with a view to deciding then whether to
continue with the same procedure or introduce modifications.(476)

381. At its meeting of 28–29 October 2009, the SPS Committee
adopted a Decision revising the Procedure.(477)

2. The Procedure to Enhance Transparency of Special and Differential
Treatment in Favour of Developing Country Members(478)

(a) General

382. The SPS Committee clarified that the procedure that is contained
in the 2009 revision should normally be used “during the comment
period following the circulation of an SPS notification in accordance
with the relevant provisions and procedures contained in the Agreement,
or subsequently adopted by Members”, with the exception of a proposed
step (Step 5) that involves the process to be followed after entry into
force of a new measure. (479)

383. The SPS Committee emphasized that the procedure proposed in the
revised Decision is without prejudice to the rights and obligations of
Members under Article 10.1 of the SPS Agreement.(480) That said, the SPS
Committee proposed measures relating to the steps that Members ought to
take after notification, the steps to be taken after entry into force of
a new measure, transparency, and administration of the procedure.(481)

(b) Notification

384. The SPS Committee proposed three steps relating to the
notification of a proposed SPS measure(482):

(i) Where an exporting developing country identifies significant
difficulties with a proposed SPS measure, that Member may, in the
comments it submits in writing to the notifying Member, request an
opportunity to discuss the issue of concern with the notifying Member.
The exporting developing country Member should identify to the notifying
Member the specific problems the proposed measure may create for its
exports, or the specific reasons why it is unable to comply with the
notified measures by the implementation date.

(ii) In response to such a request, where the appropriate level of
SPS protection allows scope for the phased introduction of the new
measure, a longer time-frame for compliance should be accorded to
developing country Members, which shall be understood to mean normally a
period of not less than six months.

(iii) Where the appropriate level of SPS protection does not allow
scope for the phased introduction of a new measure, the Member notifying
the measure, shall, upon such request, enter into consultations with the
exporting Member with a view to finding a mutually satisfactory solution
to the problem while continuing to achieve the importing Member’s
appropriate level of protection. Such consultations shall preferably
take place prior to the entry into force of the new measure.

(c) Entry into force of a new measure

385. The SPS Committee proposed that if, following the adoption or
entry into force of a new or modified measure (including an emergency
measure), an exporting developing country Member identifies significant
difficulties which its exports face in complying with the measure, it:

“[m]ay request an opportunity to discuss its difficulties with the
importing Member to attempt to resolve the issue of concern, especially
where no time, or insufficient period of time, had been provided for the
submission of comments prior to the implementation of the measure. The
importing Member shall, upon such request from an exporting developing
country Member, enter into consultations with the exporting Member to
discuss possible solutions to address the identified problem while
continuing to achieve the importing Member’s appropriate level of
protection. A possible resolution of the concern identified could
include one of the following, or a combination thereof: (1) a change in
the measure; (2) the provision of technical assistance to the exporting
developing country Member; or (3) the provision of special and
differential treatment.”(483)

(d) Transparency

386. Finally, the SPS Committee put forward a procedure that would
facilitate transparency in the implementation of the special and
differential treatment activities contained in their proposal. The
Committee proposed that when an importing Member decides on whether and
how special and differential treatment may be provided in response to a
specific request, that Member should inform the SPS Committee. This
information should be provided in writing and submitted to the WTO
Secretariat as an Addendum to the original notification concerning the
measure. The Addendum should indicate:

(i) The name(s) of the Member(s) that requested special and
differential treatment;

(ii) If special and differential treatment was provided, the form of
such treatment; and

(iii) If not provided, the Addendum should indicate why special and
differential treatment was not provided, and whether technical
assistance or any other solution was found to address the identified
concern.

3. Article 10.1

(a) Members shall “take account of” the special needs of
developing country Members

387. In EC — Approval and Marketing of Biotech Products, the
Panel examined a claim by Argentina that by adopting and applying a
general de facto moratorium on approvals of applications to place
genetically modified organisms on the market, the EC had failed to apply
its legislation in a manner which takes account of developing country
Members’ needs. The Panel found that the phrase “take account of”
does not prescribe a specific result to be achieved and that merely
because a Member (in this case the EC) did not afford special and
differential treatment to a developing country member (i.e., Argentina)
does not establish a prima facie case that the developed country Member
did not “take account of” the developing country’s needs when it
made its decision:

“[T]he obligation laid down in Article 10.1 is for the importing
Member to ‘take account’ of developing country Members’ needs. The
dictionary defines the expression ‘take account of’ as ‘consider
along with other factors before reaching a decision’. Consistent with
this, Article 10.1 does not prescribe a specific result to be achieved.
Notably, Article 10.1 does not provide that the importing Member must
invariably accord special and differential treatment in a case where a
measure has led, or may lead, to a decrease, or a slower increase, in
developing country exports.

…

The fact that there is no indication that between June 1999 and
August 2003 the European Communities accorded Argentina special and
differential treatment — e.g., by approving the marketing of biotech
products exported from Argentina — does not in and of itself
constitute prima facie evidence that the European Communities has failed
to ‘take account’ of Argentina’s needs. While the European
Communities must take account of the interests of developing country
Members in applying its approval legislation, the European Communities
may at the same time take account of other legitimate interests,
including those of its own consumers, its environment, etc. There is
nothing in Article 10.1 to suggest that in weighing and balancing the
various interests at stake, the European Communities must necessarily
give priority to the needs of Argentina as a developing country. We
therefore think it is conceivable that the European Communities ‘took
account’ of Argentina’s needs when adopting and applying its general
de facto moratorium on approvals, but ultimately determined that
applications concerning products of export interest to Argentina
warranted no special and differential treatment. Accordingly, we
consider that the fact that the European Communities did not accord
Argentina special and differential treatment vis-à-vis other developed
country exporters does not demonstrate, by itself, an inconsistency with
Article 10.1.”(484)

(b) Burden of proof

388. The Panel in EC — Approval and Marketing of Biotech
Products stated that the burden was on the complaining party to
demonstrate that the (developed) responding party had not “taken
account of” the developing country’s needs in making its decision.

“Argentina argues that the European Communities has not provided
any evidence which would prove that it has taken into account Argentina’s
special needs as a developing country Member. This argument lacks merit,
for it is incumbent on Argentina as the Complaining Party to adduce
evidence and argument sufficient to raise a presumption that the
European Communities has failed to take into account Argentina’s
special needs as a developing country Member.”(485)

The Panel in EC — Approval and Marketing of Biotech Products also
found that the absence of any reference to developing countries in the
respondent Member’s legislation was not enough to establish that the
legislation did not take the needs of developing countries into account.
Additionally, the Panel noted that Article 10.1
does not require Members
to document how they have complied with Article 10.1.

“[T]he absence of a reference to developing country needs in the
text of the EC approval legislation does not demonstrate that that
legislation itself fails to take account of these needs, or that the
European Communities is precluded from taking account, or has not taken
account, of these needs when applying that legislation. We therefore
consider that it is not sufficient, for the purposes of establishing a
claim under Article 10.1, to point to the absence in the EC approval
legislation of a reference to the needs of developing country Members.

Argentina further argues that for the entire period of application of
the general de facto moratorium on approvals it could not identify any
evidence supporting the conclusion that the European Communities has
taken account of Argentina’s special needs. We note that Argentina has
merely asserted the absence of relevant evidence, without specifying
what efforts it has undertaken to collect such evidence. Moreover, we
note that Article 10.1 does not specifically require the importing
Member to document how it has complied with Article 10.1.”(486)

390. At the Doha Ministerial Conference, Members adopted a decision
in order to establish a time-frame for the gradual introduction of new
sanitary and phytosanitary measures:

“Where the appropriate level of sanitary and phytosanitary
protection allows scope for the phased introduction of new sanitary and
phytosanitary measures, the phrase “longer time-frame for compliance”
referred to in Article 10.2 of the Agreement on the Application of
Sanitary and Phytosanitary Measures, shall be understood to mean
normally a period of not less than 6 months.”(488)

(b) where phased introduction of SPS measures is not possible

391. At the same Ministerial Conference, Members adopted a decision
that established a process to be applied in cases where the phased
introduction of a new measure may not be possible:

“Where the appropriate level of sanitary and phytosanitary
protection does not allow scope for the phased introduction of a new
measure, but specific problems are identified by a Member, the Member
applying the measure shall upon request enter into consultations with
the country with a view to finding a mutually satisfactory solution to
the problem while continuing to achieve the importing Member’s
appropriate level of protection.”(489)

1. The provisions of
Articles XXII and XXIII of GATT 1994 as
elaborated and applied by the Dispute Settlement Understanding shall
apply to consultations and the settlement of disputes under this
Agreement, except as otherwise specifically provided herein.

2. In a dispute under this Agreement involving scientific or
technical issues, a Panel should seek advice from experts chosen by the
Panel in consultation with the parties to the dispute. To this end, the
Panel may, when it deems it appropriate, establish an advisory technical
experts group, or consult the relevant international organizations, at
the request of either party to the dispute or on its own initiative.

3. Nothing in this Agreement shall impair the rights of Members under
other international agreements, including the right to resort to the
good offices or dispute settlement mechanisms of other international
organizations or established under any international agreement.

B. Interpretation and Application of Article 11

1. Articles of the SPS Agreement invoked in panel and Appellate Body
proceedings

392. For a table of disputes under the SPS Agreement, see the table
of “Articles of the Covered Agreements Invoked in Panel and Appellate
Body Proceedings” in the Chapter on the DSU.

2. Article 11.2

(a) General

393. For information on scientific experts in WTO dispute settlement
proceedings, including a table of all proceedings under the SPS
Agreement (and the GATT 1994) in which panels consulted with scientific
experts, see Article 13.2 of the Chapter on the DSU.

(b) Scope of application

394. The Appellate Body in US/Canada — Continued Suspension noted
that Article 11.2 specifically addresses the consultation of experts in
disputes under the SPS Agreement.(490)

(c) Role and value of experts

395. The Panel in US/Canada — Continued Suspension stated
that “the role of the experts was to act as an ‘interface’ between
the scientific evidence and the Panel, so as to allow it to perform its
task as the trier of fact”(491). This view was reiterated by the
Appellate Body who added that the experts consulted by a panel can
significantly influence the decision-making process.(492)

396. In Australia — Salmon (Article 21.5 — Canada), the
Panel considered that the assistance of scientific experts in the
original dispute was of utmost relevance, noting “how valuable such
expert advice had been during its previous examination” of the matter
before it. The Panel decided to seek further scientific and technical
advice for the 21.5 proceedings as “the evidence submitted to it
included several new risk analysis reports.”(493)

(d) Selection of experts

(i) The need for experts

397. In EC — Approval and Marketing of Biotech Products, the
Panel chose to seek expert advice despite the complaining parties’
argument that there was no need to do so. The Panel decided to seek
advice after receiving the second written submissions of the parties:

“[T]he European Communities formally requested the Panel to seek
advice from scientific and technical experts at an appropriate stage. In
particular, the European Communities suggested that the Panel seek
advice from the most relevant sources reflecting a representative
spectrum of views, including individual experts and perhaps competent
international organizations. Shortly thereafter, the European
Communities submitted a proposal for the terms of reference for
scientific and technical advice. The Complaining Parties expressed the
view that they did not consider it necessary for the Panel to seek any
scientific and technical advice, inter alia because they were not
challenging the opinions or assessments of the EC scientific committees.

The Panel decided to take a decision regarding the need for expert
advisers only in the light of the second written submissions by the
Parties, and provided the Parties with a further opportunity to comment
on the need for expert advice. The European Communities repeated its
request for input from experts; the Complaining Parties continued to
argue that no expert advice was necessary in the circumstances of this
case.

On 4 August 2004, the Panel informed the Parties that it considered
that certain aspects of the Parties’ submissions raised scientific
and/or technical issues in respect of which the Panel might benefit from
expert advice. Accordingly, the Panel decided to consult individual
experts to obtain their opinion on certain scientific and/or technical
issues raised in the Parties’ submissions.”(494)

398. In Japan — Apples, the Panel having noted that the
proceedings “involved scientific or technical issues, consulted with
parties regarding the need for expert advice. Neither party objected to
the Panel’s intention to seek expert advice.”(495)

(ii) Importance of selection process

399. In US/Canada — Continued Suspension, the Appellate Body
made it clear that the selection of experts has a significant bearing in
the solution of disputes within the SPS Agreement:

“Scientific experts and the manner in which their opinions are
solicited and evaluated can have a significant bearing on a Panel’s
consideration of the evidence and its review of a domestic measure,
especially in cases like this one involving highly complex scientific
issues.”(496)

400. Having recognized the importance of scientific experts in the
settlement of SPS disputes, the Appellate Body, in US/Canada —
Continued Suspension, cautioned that although panels might face
challenges when selecting experts, they should pay due consideration to
this procedural step and exercise it properly:

“We understand that Panels often face practical difficulties in
selecting experts who have the required level of expertise and whose
selection is not objected to by the parties. We do not wish to make the
expert selection process more difficult than it may already be. However,
experts consulted by a Panel can have a decisive role in a case,
especially when it involves highly complex scientific questions such as
this one. The Panel in this case said ‘the role of the experts was to
act as an “interface” between the scientific evidence and the Panel,
so as to allow it to perform its task as the trier of fact.’ Experts
appointed by a Panel can significantly influence the decision-making
process.”(497)

(iii) Consultation with the parties to the dispute

General

401. In US/Canada — Continued Suspension, the Appellate Body
ruled that a panel’s obligation to consult with parties when selecting
experts is a foundational requirement entitled to preserve parties’
due process rights during the proceedings:

“[C]onsultation with the parties in the adoption of working
procedures for selecting the experts and in the expert selection process
is a means for ensuring that the parties’ due process rights are
respected. However, … the obligation to afford the protection of due
process to the parties is not circumscribed to the expert selection
stage and does not end with the appointment of the experts. Due process
protection continues to apply throughout the consultations with the
experts.”(498)

402. In all cases to date, panels have selected experts in
consulation with the parties.

(iv) Individual experts or expert review group

403. In each case where experts have been consulted, the panels have
decided to consult experts on an individual basis, rather than create an
expert group. In EC — Hormones, the Appellate Body agreed with
the Panel’s decision to hear from individual experts rather than to
establish an expert review group:(499)

“[I]n disputes involving scientific or technical issues, neither
Article 11.2 of the SPS Agreement, nor Article 13 of the DSU
prevents Panels from consulting with individual experts. Rather, both
the SPS Agreement and the DSU leave to the sound discretion of a
Panel the determination of whether the establishment of an expert review
group is necessary or appropriate.”(500)

404. In EC — Hormones, with respect to the role of
individual scientific experts, the Panel noted that:

“It is of particular importance that we made clear to the experts
advising the Panel that we were not seeking a consensus position among
the experts but wanted to hear all views.”(501)

(v) Number of
experts

405. In Australia — Apples, Australia expressed a preference
for two experts to be consulted in each of the three relevant areas of
expertise and complained that one area of expertise only had one expert
assigned to it. The Panel acknowledged that, in general, more experts
might provide more advice than just one expert and this might be useful
to a panel. The Panel considered that while this does not imply that
consulting one competent expert would not be sufficiently useful for a
panel in a given dispute, it would necessarily narrow the range of
scientific expert advice that the Panel would receive, nor that the
parties would be prejudiced by the selection of only one expert on a
given subject.(502) The Panel also noted that neither
Article 13 of the
DSU, nor Article 11.2 of the SPS Agreement, which jointly provide the
legal basis for WTO Panels to seek the advice of experts in SPS
disputes, specify the number of experts that should be selected for each
particular issue.(503) In arriving at its decision to use only one expert
for a specific area of expertise, the Panel took into account the fact
that there was a limited available pool of experts as well as the
inappropriateness of further delaying the selection process, given that
this would have hindered the objective of seeking a prompt settlement of
the dispute, contrary to Article 3.3 of the DSU and the expressed
interest of both Parties.(504)

(vi) International organizations

406. In EC — Approval and Marketing of Biotech Products,
although the complaining parties disagreed with the Panel’s decision
to consult with international organizations, the Panel found it relevant
to seek assistance from certain international organizations in order to
clarify certain aspects of the parties’ submissions. The Panel
considered that the concepts at issue “raised scientific and/or
technical issues” in respect of which it might benefit from experts’
advice:

“[T]he Panel decided that it would seek information from certain
international organizations which might assist the Panel in determining
the meaning of selected terms and concepts. Most of these terms and
concepts appear in the WTO agreements at issue in this dispute (e.g.,
‘pest’). We note in this regard that the European Communities argued
that the Panel also needed to consult scientific experts on the meaning
of the relevant terms. The Complaining Parties opposed the European
Communities’ request, arguing that the terms in question were terms
appearing in WTO agreements and that, as such, the Panel needed to
determine their meaning by applying the customary rules of
interpretation of public international law, as required by Article 3.2
of the DSU.”(505)

407. The Panel in EC — Approval and Marketing of Biotech
Products, having decided to request input from some international
organizations, took into account the parties’ opinions throughout its
consultation with the designated organizations. (506)

(vii) Conflict of interest

General

408. See also the Section on the Rules of Conduct in the Chapter on
the DSU.

Disclosure requirement

409. The Appellate Body in US/Canada — Continued Suspension,
considered that “[t]he purpose of the self-disclosure statement is to
reveal relevant facts that would allow the Panel to determine whether
the information is likely to affect or give rise to justifiable doubts
as to the expert’s independence or impartiality”.(507)

410. In US/Canada — Continued Suspension, the Appellate Body
described the scope of application of the self-disclosure rules provided
under Section VI of the Rules of Conduct:

“Covered persons should be encouraged to disclose any information
that may be relevant for purposes of ascertaining whether there may be
justifiable doubts as to their independence or impartiality. Disclosure
should not lead to automatic exclusion. Whether the disclosed
information is likely to affect or give rise to justifiable doubts as to
the person’s independence or impartiality must be objectively
determined and properly substantiated. In the case of an expert, the
Panel should assess the disclosed information against information
submitted by the parties or other information that may be available. It
should then determine whether, on the correct facts, there is a
likelihood that the expert’s independence and impartiality may be
affected, or if justifiable doubts arise as to the expert’s
independent or impartiality. If this is indeed the case, the Panel must
not appoint such person as an expert.”(508)

The Panel’s obligation to ensure the impartiality of selected
experts

411. In US/Canada — Continued Suspension, the Appellate Body
held that the qualifications and relevant knowledge of selected experts
or their membership to an international recognized scientific body, are
not by themselves sufficient guarantees of their independence and
impartiality:

“An expert could be very qualified and knowledgeable and yet his or
her appointment could give rise to concerns about his or her
impartiality or independence, because of that expert’s institutional
affiliation or for other reasons. Similarly, the fact that JECFA may
select its experts according to strict procedures does not in itself
ensure that these experts are independent and impartial in respect of
the issues that may arise in a WTO dispute.”(509)

412. In emphasizing the Panel’s obligation to observe the
principles of fairness and impartiality in the selection of experts and
consultations with scientific experts, the Appellate Body in US/Canada
— Continued Suspension stated:

“Fairness and impartiality in the decision-making process are
fundamental guarantees of due process. Those guarantees would not be
respected where the decision-makers appoint and consult experts who are
not independent or impartial. Such appointments and consultations
compromise a Panel’s ability to act as an independent adjudicator. For
these reasons, we agree with the view of the European Communities that
the protection of due process applies to a Panel’s consultations with
experts. This due process protection applies to the process for
selecting experts and to the Panel’s consultations with the experts,
and continues throughout the proceedings.”(510)

413. The Appellate Body in US/Canada — Continued Suspension held
that a panel, presented with information likely to raise doubts as to
the independence or impartiality of an expert, should not select that
expert:

“The requirements under Section VI of the Rules of Conduct relate,
as the title indicates, to the self-disclosure obligation of covered
persons, including experts. The Rules of Conduct do not provide
for automatic exclusion of a covered person upon the disclosure of
information pursuant to Section VI and the Illustrative List of
Information to be Disclosed, which is attached to the Rules of
Conduct as Annex 2. However, we fail to see on what basis a Panel,
presented with information likely to affect or give rise to justifiable
doubts as to the independence or impartiality of an expert, could choose
to consult such an expert.”(511)

Affiliations that may raise doubts as to independence and
impartiality

414. In US/Canada — Continued Suspension, the Appellate Body
considered that the affiliation of the appointed experts with the
institution that performed the risk assessment at issue may diminish
their independence and impartiality. The Appellate Body rejected the
Panel’s reasoning related to the decision-making process within the
scientific body where the experts served previously(512):

“We recognize that JECFA involves a decision-making process based
on consensus and that the outcome of the process need not necessarily
reflect the views of its individual members. However, the fact that this
process involves several individuals and that the outcome may be the
result of a compromise does not mean that the joint outcome of the
process can be disconnected from the experts that participated in the
process. On the contrary, one would expect that the views of the experts
that participated in the process would be reflected, in various degrees,
in the outcome. As noted earlier, Drs. Boisseau’s and Boobis’
participation was not indirect or marginal. Rather, both would be
expected to have had particular influence in the process given their
respective roles as Chairman and Vice-Chairman, and Joint Rapporteur.
Moreover, irrespective of their degree of influence in the process, both
would be expected to have a natural inclination to identify with JECFA’s
evaluation as participants in the consensus. Therefore, we do not
consider that the fact that JECFA reaches its conclusions by consensus
dispels our concerns regarding the propriety of the Panel asking
Drs. Boisseau and Boobis to evaluate the European Communities’ risk
assessment.”(513)

415. The Appellate Body in US/Canada — Continued Suspension also
disagreed with the Panel’s statements that scientists could be
considered objective when assessing their own work, particularly where
the stated work has been used as a benchmark by the Panel:

“The Panel … expressed the view that Drs. Boisseau and Boobis, by
virtue of their work as scientists, could be relied upon to be objective
in their assessment of critiques of their work, as well as of new
scientific evidence that might require altering the conclusions of their
prior work. …

We recognize that scientists will often be asked to review studies
performed by other scientists and that the scientific community must
constantly reassess theories in the light of scientific progress.
However, … the Panel did not simply ask Drs. Boisseau and Boobis about
JECFA’s work and risk assessments. In the consultations with experts,
the Panel asked Drs. Boisseau and Boobis to evaluate the European
Communities’ risk assessment and they did so using JECFA’s
evaluations as a benchmark. This is problematic in this case because the
European Communities’ risk assessment called into question the
validity of JECFA’s evaluations and explicitly stated that it would
not follow them. In the light of this, it was improper for the Panel to
consult with Drs. Boisseau and Boobis, who were directly involved in
JECFA’s evaluations. The concerns raised in this situation are not
addressed by the fact that scientists regularly conduct ‘peer reviews’
or may recognize that science evolves. Nor are the concerns addressed by
the Panel’s explanation that JECFA’s work is linked to Codex, which
is expressly recognized by the SPS Agreement as having
responsibilities for the ‘establishment of international standards,
guidelines and recommendations’(514).”(515)

416. In Australia — Apples, Australia objected to the Panel’s
decision to consult with a particular expert, arguing that the expert
had a connection to New Zealand. In overruling Australia’s objection,
the Panel noted that panels are responsible for ensuring that the
selected experts have the necessary qualifications and expertise, and
comply with the requirements for independence, impartiality and
avoidance of conflicts of interest. Conversely, it is not enough for a
party to simply assert an objection regarding the selection of a
particular expert. Any party raising such an objection is expected to
explain in what manner the expert’s independence or impartiality have
been or may be compromised.(516) The Panel stated:

“Under the Rules of Conduct for the DSU applicable to all covered
persons in WTO dispute settlement, experts ‘shall be independent and
impartial, shall avoid direct or indirect conflicts of interest …
pursuant to the dispute settlement mechanism, so that through the
observance of such standards of conduct the integrity and impartiality
of that mechanism are preserved.’ … like other persons covered by
the Rules of Conduct, experts ‘shall disclose any information that
could reasonably be expected to be known to them at the time which,
coming within the scope of the Governing Principle of these Rules, is
likely to affect or give rise to justifiable doubts as to their
independence or impartiality.’ According to the Illustrative List
annexed to the Rules of Conduct, this disclosure shall include
information relating to:

(b) professional interests (e.g. a past or present relationship with
private clients, or any interests the person may have in domestic or
international proceedings, and their implications, where these involve
issues similar to those addressed in the dispute in question);

(c) other active interests (e.g. active participation in public
interest groups or other organisations which may have a declared agenda
relevant to the dispute in question);

(d) considered statements of personal opinion on issues relevant to
the dispute in question (e.g. publications, public statements);

(e) employment or family interests (e.g. the possibility of any
indirect advantage or any likelihood of pressure which could arise from
their employer, business associates or immediate family members).’

…

According to Australia, Dr Cross’s alleged connection to the New
Zealand Government results from his ‘research projects and
publications with researchers from Hort Research New Zealand.’ As a
matter of fact, Hort Research is wholly owned by the New Zealand
Government. However, participation in joint research with other
scientists who may be affiliated with a government-funded institution
does not itself imply a connection with that Government. There is no
indication that Dr Cross has worked for the Government of New Zealand,
nor that he has received any monetary compensation from that Government.
The extent of his collaboration with New Zealand scientists at Hort
Research and the fact that he did not have ‘any jointly funded
research projects’ with these scientists was disclosed by Dr Cross,
when initially approached by the Panel.

Australia does not submit any additional arguments, nor any specific
evidence for the alleged connection of Dr Cross with the New Zealand
Government. In the light of the Illustrative List of the Rules of
Conduct cited above, there is no indication that Dr Cross has any
financial, business or property interests ‘relevant to the dispute in
question’, nor that he has any professional, other active, employment
or family interests in the dispute, under paragraphs
(a), (b), (c) and
(e) of that List.”(517)

(e) Obligations of individual experts

417. In US/Canada — Continued Suspension, the Appellate Body
noted that the experts were not only bound by the obligations in the ad
hoc Working Procedures adopted by the Panel, but also by the Rules of
Conduct:

“Paragraph 9 of the Experts Working Procedures adopted by the Panel
prescribes that experts will be selected ‘on the basis of their
qualification and the need for specialized scientific or technical
expertise’. Paragraph 11 additionally provides:

The selected experts shall act in their individual capacities and not
as representatives of any entity. They shall be subject to the Rules
of Conduct for the Understanding on Rules and Procedures Governing the
Settlement of Disputes (WT/DSB/RC1), including the self-disclosure
requirement set out in Section VI of the Rules of Conduct.”(518)

418. In US/Canada — Continued Suspension, the Appellate Body
adduced the rules providing for independence and impartiality of the
scientific experts advising the Panel:

“[E]xperts advising Panels are specifically covered by the Rules
of Conduct and, pursuant to Section II (Governing Principle), they
‘shall be independent and impartial, [and] shall avoid direct or
indirect conflicts of interest …, so that through the observance of
such standards of conduct the integrity and impartiality of that
mechanism are preserved’.

Selected experts are also subject to certain self-disclosure and
confidentiality obligations set out elsewhere in the Rules of Conduct,
and procedures exist for the referral of a ‘material violation’ of
these obligations to the Chairman of the DSB for appropriate action.(519)”(520)

420. In Australia — Apples, the Panel noted that a panel has
a broad right to seek information and technical advice from scientific
experts to help the Panel make an objective assessment of the matter
before it. The Panel recalled that a panel has significant investigative
authority and one way of exercising this authority was through expert
consultation:

“Under Articles 13.1 of the DSU and
11.2 of the SPS Agreement, a
Panel has a broad right to seek information and technical advice from
scientific experts. Indeed, under Article 11.2 of the SPS
Agreement, a
Panel engaged in dispute settlement proceedings involving scientific or
technical issues under that agreement should ‘seek advice from experts
chosen by the Panel in consultation with the parties to the dispute’.
Expert consultation is part of the broad right of a Panel ‘to seek
information and technical advice from any individual or body which it
deems appropriate’ and to ‘seek information from any relevant source’
and ‘consult experts to obtain their opinion on certain aspects of the
matter’ under Article 13 of the DSU. Ultimately, the purpose of expert
consultation is to allow a Panel to exercise its duty to ‘make an
objective assessment of the matter before it’, pursuant to Article 11
of the DSU.

…

As noted above, in the US/Canada — Continued Suspension dispute,
the Appellate Body confirmed the ‘significant investigative authority’
of Panels under Article 13 of the DSU and
Article 11.2 of the SPS
Agreement and the broad discretion of Panels in exercising this
authority, including through expert consultation.(522)”(523)

Limitations on significant investigative authority

421. In Japan — Agricultural Products II, the Appellate Body
stressed that the investigative authority of a panel did not stretch so
far as to “make the case for a complaining party”:

“[A]rticle 13 of the DSU and
Article 11.2 of the SPS Agreement
suggest that Panels have a significant investigative authority. However,
this authority cannot be used by a Panel to rule in favour of a
complaining party which has not established a prima facie case of
inconsistency based on specific legal claims asserted by it. A Panel is
entitled to seek information and advice from experts and from any other
relevant source it chooses, pursuant to Article 13 of the DSU and, in an
SPS case, Article 11.2 of the SPS Agreement, to help it to understand
and evaluate the evidence submitted and the arguments made by the
parties, but not to make the case for a complaining party.”(524)

422. In Australia — Apples, in the context of the Panel’s
consultation with experts, the Panel held that a panel is precluded from
considering issues that fall outside the terms of reference approved by
the DSB.(525)

(ii) Due process

423. The Panel in Australia — Apples acknowledged that due
process fully applies to the selection and consultation of experts by
panels but noted that it is difficult to state in the abstract whether a
specific type of procedural concern affects due process. The Panel found
that such concerns are to be addressed on a case-by-case basis:

“The concept of due process is implicit in WTO dispute
settlement.(526) …

According to the Appellate Body, due process fully applies to the
selection and consultation of experts by Panels: ‘[T]he protection of
due process applies to a Panel’s consultations with experts. This due
process protection applies to the process for selecting experts and to
the Panel’s consultations with the experts, and continues throughout
the proceedings.’(527)

If a procedural concern puts at risk the purpose and role of due
process in WTO dispute settlement, it is effectively a due process
concern, to which Panels need to pay special attention. However, it is
difficult to state in the abstract whether a specific type of procedural
concern affects due process. Only by taking into account the specific
circumstances of the case, can a Panel assess whether a procedural
concern affects due process and thus merits such special attention.”(528)

424. In Australia — Apples, Australia raised concerns about
how some questions to the experts were framed. The Panel found that when
each party has been allowed to pose its own questions, to comment on
responses received from the experts and to pose subsequent questions to
the experts in a meeting with the Panel, the parties’ respective
positions in the proceedings and their due process rights are not
prejudiced by the specific formulation of a question posed by a panel to
the experts.(529)

“14.2 At the request of a party to a dispute, or at its own
initiative, a Panel may establish a technical expert group to assist in
questions of a technical nature, requiring detailed consideration by
experts.

In light of the claims of the Complaining Parties that the measures
at issue violated, inter alia, the SPS Agreement and/or
the TBT Agreement, at the time of the organizational meeting the
Panel established a deadline for the Parties to request the Panel to
seek appropriate scientific and technical advice pursuant to the
provisions of these agreements.”(530)

“For our examination of this dispute, we considered it more useful
to leave open the possibility of receiving a range of opinions from
individual experts on specific scientific and technical questions,
rather than to establish an expert review group which would have been
required to reach a consensus view on the basis of general terms of
reference given to it by the Panel. We considered that neither Article
11.2 of the SPS Agreement nor Article 13.2 of the DSU limits our right
to seek information from individual experts as provided for in
Article 11.2, first sentence, of the SPS Agreement and Articles 13.1 and
13.2, first sentence, of the DSU.”(531)

1.
A Committee on Sanitary and Phytosanitary Measures is hereby
established to provide a regular forum for consultations. It shall carry
out the functions necessary to implement the provisions of this
Agreement and the furtherance of its objectives, in particular with
respect to harmonization. The Committee shall reach its decisions by
consensus.

2.
The Committee shall encourage and facilitate ad hoc consultations
or negotiations among Members on specific sanitary or phytosanitary
issues. The Committee shall encourage the use of international
standards, guidelines or recommendations by all Members and, in this
regard, shall sponsor technical consultation and study with the
objective of increasing coordination and integration between
international and national systems and approaches for approving the use
of food additives or for establishing tolerances for contaminants in
foods, beverages or feedstuffs.

3.
The Committee shall maintain close contact with the relevant
international organizations in the field of sanitary and phytosanitary
protection, especially with the Codex Alimentarius Commission, the
International Office of Epizootics, and the Secretariat of the
International Plant Protection Convention, with the objective of
securing the best available scientific and technical advice for the
administration of this Agreement and in order to ensure that unnecessary
duplication of effort is avoided.

4.
The Committee shall develop a procedure to monitor the process of
international harmonization and the use of international standards,
guidelines or recommendations. For this purpose, the Committee should,
in conjunction with the relevant international organizations, establish
a list of international standards, guidelines or recommendations
relating to sanitary or phytosanitary measures which the Committee
determines to have a major trade impact. The list should include an
indication by Members of those international standards, guidelines or
recommendations which they apply as conditions for import or on the
basis of which imported products conforming to these standards can enjoy
access to their markets. For those cases in which a Member does not
apply an international standard, guideline or recommendation as a
condition for import, the Member should provide an indication of the
reason therefor, and, in particular, whether it considers that the
standard is not stringent enough to provide the appropriate level of
sanitary or phytosanitary protection. If a Member revises its position,
following its indication of the use of a standard, guideline or
recommendation as a condition for import, it should provide an
explanation for its change and so inform the Secretariat as well as the
relevant international organizations, unless such notification and
explanation is given according to the procedures of Annex
B.

5. In order to avoid unnecessary duplication, the Committee may
decide, as appropriate, to use the information generated by the
procedures, particularly for notification, which are in operation in the
relevant international organizations.

6. The Committee may, on the basis of an initiative from one of the
Members, through appropriate channels invite the relevant international
organizations or their subsidiary bodies to examine specific matters
with respect to a particular standard, guideline or recommendation,
including the basis of explanations for non-use given according to
paragraph 4.

7.
The Committee shall review the operation and implementation of
this Agreement three years after the date of entry into force of the WTO
Agreement, and thereafter as the need arises. Where appropriate, the
Committee may submit to the Council for Trade in Goods proposals to
amend the text of this Agreement having regard, inter alia, to
the experience gained in its implementation.

B. Interpretation and Application of Article 12

1. Article 12.1

(a) General

431. At its meeting of 19–20 March 1997, the SPS Committee adopted
Rules of Procedure.(535)

433.
Article 12.1, along with Articles 12.2 and
12.3, is mentioned in
the second sentence of Article 5.5. In this sentence, Members are asked
to cooperate with the SPS Committee to develop guidelines to further the
implementation of the provision. In accordance with this sentence, the
SPS Committee, in June 2000, adopted guidelines to further the practical
implementation of Article 5.5. For the description of these guidelines,
refer to paragraphs 244–248 above.

2. Article 12.2

(a) General

434. Several Members have submitted proposals for a procedure to
facilitate the use of ad hoc consultations and negotiations among
Members.(536)

435. On the basis of the proposals from Members, in 2009 the
Secretariat prepared a “Proposed Recommendation Procedure [To
Encourage and Facilitate] [on] Ad Hoc Consultations [or Negotiations]
Among Members under the SPS Agreement (Article
12.2)”.(537) The
Secretariat has been revised on several occasions, most recently on 12
September 2009.(538)

(b) Relationship with other Articles

(i) Article 5.5

436.
Article 12.2, along with Articles 12.1 and
12.3, is mentioned in
the second sentence of Article 5.5. In this sentence, Members are asked
to cooperate with the SPS Committee to develop guidelines to further the
implementation of the provision. In accordance with this sentence, the
SPS Committee has adopted guidelines to further the practical
implementation of Article 5.5. For the description of these guidelines,
refer to paragraphs 244–248 above.

3. Article 12.3

(a) General

437. Since 1995, the SPS Committee has granted observer status to a
total of 21 bodies, either on a regular basis, as part of a WTO
reciprocity agreement/MOU, or on an ad hoc basis.(539)

(b) Relationship with other Articles

(i) Article 5.5

438.
Article 12.3, along with Articles 12.1 and
12.2, is mentioned in
the second sentence of Article 5.5. In this sentence, Members are asked
to cooperate with the SPS Committee to develop guidelines to further the
implementation of the provision. In accordance with this sentence, the
SPS Committee has adopted guidelines to further the practical
implementation of Article 5.5. For the description of these guidelines,
refer to paragraphs 244–248 above.

4. Article 12.4

(a) General

439. At its meeting of 15–16 October 1997, the SPS Committee
adopted provisional procedures to monitor the use of international
standards(540), and also agreed to review the operation of the provisional
monitoring procedure 18 months after its implementation, with a view to
deciding at that time whether to continue with the same procedure, amend
it or develop another one.(541) After agreeing to a number of extensions
on the provisional procedure to monitor the use of international
standards, at its meeting of 27–28 October 2004, the SPS Committee
adopted modifications to the provisional procedure to monitor the use of
international standards.(542) On 5 July 2006, the Committee adopted a
decision to modify and extend the provisional procedure to monitor the
process of international harmonization.(543)

441. At its meeting on 15–16 October 1997, the SPS Committee agreed
on procedures for conducting the review of the implementation and
operation of the SPS Agreement.(544) The First Review was completed in
March 1999.(545)

442. At the Doha Ministerial Conference, Members adopted a deadline
for reviewing the operation and implementation of the SPS Agreement:

“Pursuant to the provisions of Article 12.7 of the Agreement on the
Application of Sanitary and Phytosanitary Measures, the Committee on
Sanitary and Phytosanitary Measures is instructed to review the
operation and implementation of the Agreement on Sanitary and
Phytosanitary Measures at least once every four years.”(546)

443. At its meeting of 22–23 June 2004, the Committee decided on
the process for the Second Review of the SPS Agreement. The Committee
completed its Second Review and adopted a report in this respect on 30
June 2005.(547)

444. At its October 2008 meeting, the Committee adopted a procedure
and timetable to undertake the Third Review of the Agreement.(548) The
report of the Third Review was adopted by the Committee on 18 March
2010.(549)

445. As in the two previous Reviews, the Committee discussions in the
Third Review focused on operation and implementation issues related to:
Consistency (Article 5.5); Equivalence
(Article 4); Transparency (Article 7 and
Annex B); Monitoring the use of international standards
(Article 3.5 and 12.4); Technical assistance and training activities
(Article 9); Special and differential treatment
(Article 10);
Regionalization (Article 6); Monitoring the implementation of the
Agreement (Articles 12.1 and 12.2) — Specific trade concerns / Use of
ad hoc consultations; Cooperation with Codex Alimentarius, World
Organisation for Animal Health (OIE), and the International Plant
Protection Convention (IPPC) (Article 12.3); and Dispute settlement
activities (Article 11). In addition, in the Third Review the Committee
also considered: Implementation of the Agreement — Article
13; Private
voluntary standards; Good regulatory practice; and Control, Inspection
and Approval Procedures (Article 8 and Annex
C).(550)

Members are fully responsible under this Agreement for the observance
of all obligations set forth herein. Members shall formulate and
implement positive measures and mechanisms in support of the observance
of the provisions of this Agreement by other than central government
bodies. Members shall take such reasonable measures as may be available
to them to ensure that non-governmental entities within their
territories, as well as regional bodies in which relevant entities
within their territories are members, comply with the relevant
provisions of this Agreement. In addition, Members shall not take
measures which have the effect of, directly or indirectly, requiring or
encouraging such regional or non-governmental entities, or local
governmental bodies, to act in a manner inconsistent with the provisions
of this Agreement. Members shall ensure that they rely on the services
of non-governmental entities for implementing sanitary or phytosanitary
measures only if these entities comply with the provisions of this
Agreement.

B. Interpretation and Application of Article 13

1. Scope of the SPS Agreement

446. The Panel in Australia — Salmon (Article 21.5 — Canada),
in reading the obligations of the provisions of Article 1.1 and
13 of
the SPS Agreement together, found that a measure taken by a regional
government within Australia’s territory, was a measure taken by an “other
than central government body” and would fall under the responsibility
of Australia as WTO Member when it comes to observance of SPS
obligations. Thus, the Panel concluded that it was entitled to consider
whether the measure taken by the regional government observed the SPS
Agreement(551):

“Article 13 of the SPS Agreement provides unambiguously
that: (1) ‘Members are fully responsible under [the SPS] Agreement for
the observance of all obligations set forth herein’; and (2) ‘Members
shall formulate and implement positive measures and mechanisms in
support of the observance of the provisions of this Agreement by other
than central government bodies’. Reading these two obligations
together [Article 1.1 and Article
13]…, we consider that sanitary
measures taken by the Government of Tasmania, being an ‘other than
central government’ body as recognized by Australia, are subject to
the SPS Agreement and fall under the responsibility of Australia
as WTO Member when it comes to their observance of SPS obligations.”(552)

The least-developed country Members may delay application of the
provisions of this Agreement for a period of five years following the
date of entry into force of the WTO Agreement with respect to their
sanitary or phytosanitary measures affecting importation or imported
products. Other developing country Members may delay application of the
provisions of this Agreement, other than paragraph 8 of Article 5 and
Article 7, for two years following the date of entry into force of the
WTO Agreement with respect to their existing sanitary or phytosanitary
measures affecting importation or imported products, where such
application is prevented by a lack of technical expertise, technical
infrastructure or resources.

B. Interpretation and Application of Article 14

448. In EC — Hormones, the Panel referred to
Article 14 in
the context of finding that the SPS Agreement applies to SPS measures
that were enacted before 1 January 1995 but were maintained thereafter:

“[S]everal provisions of the SPS Agreement confirm the general
principle that the SPS Agreement should also apply to sanitary measures
which were enacted before its entry into force but which remain in force
thereafter. Except for Article 14 which authorizes delays in the
application of some or all of the provisions of the SPS Agreement for
least-developed and other developing countries, no transition periods
are provided for. The fact that Article 14 explicitly provides for a
two-year transition period for developing countries with respect to some
of their existing sanitary and phytosanitary measures, confirms
that the SPS Agreement generally applies to measures enacted before the
entry into force of the SPS Agreement but which are maintained in force
after that date.”(553)

449. In EC — Hormones, the Appellate Body upheld the Panel’s
finding regarding the temporal scope of the SPS Agreement. After stating
that the SPS Agreement does not contain any provision limiting the
temporal application of the SPS Agreement to SPS measures adopted after
1 January 1995, the Appellate Body noted:

“Article 14 of the SPS Agreement allows the least-developed
country Members and other developing country Members to delay
implementation of the provisions of that Agreement for a period of five
and two years, respectively, following the date of entry into force
of the WTO Agreement. Developing country Members may only delay
application of the provisions of that Agreement where such application
is prevented by lack of technical expertise, technical infrastructure or
resources. This right to defer application of the provisions of
the SPS Agreement concerns, however, both SPS measures existing
before the entry into force of the WTO Agreement and SPS measures
enacted since.”(554)

(footnote original)
4 For the purpose of these definitions,
“animal” includes fish and wild fauna; “plant” includes forests
and wild flora; “pests” include weeds; and “contaminants”
include pesticide and veterinary drug residues and extraneous matter.

1. Sanitary or phytosanitary measure — Any measure applied:

(a) to protect animal or plant life or health within the territory of
the Member from risks arising from the entry, establishment or spread of
pests, diseases, disease-carrying organisms or disease-causing
organisms;

(b) to protect human or animal life or health within the territory of
the Member from risks arising from additives, contaminants, toxins or
disease causing organisms in foods, beverages or feedstuffs;

(c) to protect human life or health within the territory of the
Member from risks arising from diseases carried by animals, plants or
products thereof, or from the entry, establishment or spread of pests;
or

(d) to prevent or limit other damage within the territory of the
Member from the entry, establishment or spread of pests.

Sanitary or phytosanitary measures include all relevant laws,
decrees, regulations, requirements and procedures including, inter
alia, end product criteria; processes and production methods;
testing, inspection, certification and approval procedures; quarantine
treatments including relevant requirements associated with the transport
of animals or plants, or with the materials necessary for their survival
during transport; provisions on relevant statistical methods, sampling
procedures and methods of risk assessment; and packaging and labelling
requirements directly related to food safety.

2. Harmonization — The establishment, recognition and
application of common sanitary and phytosanitary measures by different
Members.

3. International standards, guidelines and recommendations

(a) for food safety, the standards, guidelines and recommendations
established by the Codex Alimentarius Commission relating to food
additives, veterinary drug and pesticide residues, contaminants, methods
of analysis and sampling, and codes and guidelines of hygienic practice;

(b) for animal health and zoonoses, the standards, guidelines and
recommendations developed under the auspices of the International Office
of Epizootics;

(c) for plant health, the international standards, guidelines and
recommendations developed under the auspices of the Secretariat of the
International Plant Protection Convention in cooperation with regional
organizations operating within the framework of the International Plant
Protection Convention; and

(d) for matters not covered by the above organizations, appropriate
standards, guidelines and recommendations promulgated by other relevant
international organizations open for membership to all Members, as
identified by the Committee.

4. Risk assessment — The evaluation of the likelihood of
entry, establishment or spread of a pest or disease within the territory
of an importing Member according to the sanitary or phytosanitary
measures which might be applied, and of the associated potential
biological and economic consequences; or the evaluation of the potential
for adverse effects on human or animal health arising from the presence
of additives, contaminants, toxins or disease-causing organisms in food,
beverages or feedstuffs.

5. Appropriate level of sanitary or phytosanitary protection — The
level of protection deemed appropriate by the Member establishing a
sanitary or phytosanitary measure to protect human, animal or plant life
or health within its territory.

NOTE: Many Members otherwise refer to this concept as the “acceptable
level of risk”.

6. Pest- or disease-free area — An area, whether all of a
country, part of a country, or all or parts of several countries, as
identified by the competent authorities, in which a specific pest or
disease does not occur.

NOTE: A pest- or disease-free area may surround, be surrounded by, or
be adjacent to an area — whether within part of a country or in a
geographic region which includes parts of or all of several countries
— in which a specific pest or disease is known to occur but is subject
to regional control measures such as the establishment of protection,
surveillance and buffer zones which will confine or eradicate the pest
or disease in question.

7. Area of low pest or disease prevalence — An area, whether
all of a country, part of a country, or all or parts of several
countries, as identified by the competent authorities, in which a
specific pest or disease occurs at low levels and which is subject to
effective surveillance, control or eradication measures.

B. Interpretation and Application of Annex A

1. Annex A(1): sanitary or phytosanitary measure

(a) The definition of an SPS measure

450. The Appellate Body in Australia — Apples considered
that a fundamental element of the definition of “SPS measure” set
out in Annex A(1) is that such a measure must be one applied to protect
at least one of the listed interests or to prevent or limit specified
damage.(555)

(i) Relevance of trade effects of a measure

451. In Japan — Apples, the Panel noted that the definition
in Annex A(1) does not consider the trade effect of a given measure as a
factor to determine whether such a measure is or is not a phytosanitary
measure.(556)

(ii) Purpose, form and nature

452. In EC — Approval and Marketing of Biotech Products, the
Panel examined whether various European Communities’ actions
constituted an SPS measure that would fall under the SPS Agreement.
Specifically, the Panel looked to the definition of a sanitary or
phytosanitary measure set out in Annex A(1) and explained that in
determining whether a measure is an SPS measure, regard must be had to
such elements as the purpose of the measure, its legal form and its
nature:

“Annex A(1) indicates that for the purposes of determining whether
a particular measure constitutes an ‘SPS measure’ regard must be had
to such elements as the purpose of the measure, its legal form and its
nature. The purpose element is addressed in Annex A(1)(a) through
(d) (‘any
measure applied to’). The form element is referred to in the second
paragraph of Annex A(1) (‘laws, decrees, regulations’). Finally, the
nature of measures qualifying as SPS measures is also addressed in the
second paragraph of Annex A(1) (‘requirements and procedures,
including, inter alia, end product criteria; processes and production
methods; testing, inspection, certification and approval procedures;
[etc.]’).”(557)

453. Acknowledging the Panel’s decision in EC — Approval and
Marketing of Biotech Products, the Panel in Australia — Apples noted
that Annex A(1) contains the legal definition for the term SPS measure.(558)
However, the Panel had a different reading of how two of the elements
(form and nature) are reflected in the second paragraph of Annex A(1)
from that adopted by the Panel in EC — Approval and Marketing of
Biotech Products. The Panel did not agree that the list of examples
in the second paragraph of Annex A(1) provides a clear-cut division
between the elements of form and nature. The Panel considered that the
ordinary way to read “laws, decrees, regulations, requirements and
procedures” is as an enumeration of five items with the words “all
relevant” qualifying each one of them:

“This Panel considers that the second paragraph of
Annex A(1) sets
out elements of the definition of SPS measures by providing examples. In
fact, the second paragraph starts with the words ‘Sanitary and
phytosanitary measures include’. Thus, the items spelt out in the
second paragraph do not form a closed list. This is quite different from
the closed list of possible purposes of a covered SPS measure under the
first paragraph of Annex A(1), in particular its subparagraphs
(a)-(d).

Further, the Panel does not consider that the list of examples in the
second paragraph of Annex A(1) provides a clear-cut division between the
elements of form and nature, the first three items (‘laws, decrees,
regulations’) corresponding to the form, and the latter two (‘requirements
and procedures’) to the nature of SPS measures. Given the placing of
the word ‘and’ between the fourth and fifth items, the ordinary way
to read ‘laws, decrees, regulations, requirements and procedures’ is
as an enumeration of five items, with the words ‘all relevant’
qualifying each one of them.”(559)

454. In arriving at its conclusion on the elements of form and
nature, the Panel in Australia — Apples examined the English,
Spanish and French versions of the SPS Agreement:

“[O]ne basic principle of treaty interpretation is that ‘[t]he
terms of the treaty are presumed to have the same meaning in each
authentic text’(560), and that the treaty interpreter should aim at ‘the
meaning which best reconciles the texts [in the different authentic
language versions], having regard to the object and purpose of the
treaty.’(561) The SPS Agreement has three language versions, in English,
French and Spanish, each equally authentic.(562)

The Spanish version of
the second paragraph of Annex A(1) refers to ‘todas las leyes,
decretos, reglamentos, prescripciones y procedimientos
pertinentes’, placing the ‘y’ before the fifth item of
the enumeration, and embracing the five items between the words ‘todas’
and ‘pertinentes’ (‘all relevant’ in English). The French
version mentions ‘toutes lois, tous décrets, toutes
réglementations, toutes prescriptions et toutes procédures pertinents’,
again with the word ‘et’ appearing before the fifth item.
Further, the French version makes it evident that both the words in the
phrase ‘all relevant’ at the beginning of the enumeration in the
English version should be read as relating to all five items of the
list. In fact, the French version repeats the word ‘tou[te]s’
before each of the five items. Further, it uses the adjective ‘pertinents’
in the masculine, indicating that it cannot relate only to the
immediately preceding noun ‘procédures’, nor to the two
preceding nouns (‘prescriptions’ and ‘réglementations’).
…

In the light of the above, the three authentic language versions of
the last paragraph of Annex A(1) are interpreted most harmoniously if
the terms ‘laws, decrees, regulations, requirements and procedures’
are perceived as a list of five items of equal quality and importance,
with the words ‘all’ and ‘relevant’ referring to each of these
items.

…

Since this Panel reads ‘all relevant laws, decrees, regulations,
requirements and procedures’ as a list of five items, it disagrees
with the EC — Approval and Marketing of Biotech Products Panel
that the examples following this list in Annex A(1)
would relate only to
the last two items of the list (‘requirements and procedures’). The
Panel is aware that some of the examples repeat the words ‘requirements’
and ‘procedures’. But not all do. Laws, decrees and regulations may
typically set out requirements and procedures, so the examples including
the words ‘requirements’ and ‘procedures’ can be read as also
qualifying ‘laws, decrees, regulations’.”(563)

455. Having reviewed the language of
Annex A(1) in all three versions
of the SPS Agreement, the Panel in Australia — Apples concluded
that both the form and nature elements in the definition of SPS measures
were broad and closely connected, without a clear distinction between
the two:

“In sum, the form and nature elements in the definition of SPS
measures in Annex A(1) are both broad, and they are closely connected to
each other. Accordingly, the Panel will now analyse whether the
16 measures fit the elements of form and nature spelt out in the second
paragraph of Annex A(1). Given the linkage of form and nature under that
paragraph, the Panel will assess these two elements together to analyse
whether the 16 measures can qualify as SPS measures.”(564)

456. The Panel in US — Poultry (China) also disagreed with
the Panel’s findings in EC — Approval and Marketing of Biotech
Products on the premise that the text of Annex A(1)
provides no
clear distinction between form and nature. The Panel stated:

“We note that the text of Annex A(1)
does not mention the term ‘nature’
but neither does it mention the terms ‘purpose’ and ‘form’. This
does not mean that the analysis of the ordinary meaning of the wording
of Annex A(1) in its context and in light of its object and purpose,
would not lead us to examining both the purpose and form of Section 727
in order to determine whether it is an SPS measure.

…

The Panel has carefully examined the Panel’s findings in EC —
Approval and Marketing of Biotech Products as regards the legal
basis for distinction of ‘form’ and ‘nature’ and has difficulty
with following the reasoning. The rationale for dividing the phrase ‘laws,
decrees, regulations, requirements and procedures including …,’ into
‘form’ and ‘nature’ is not clear to us as the Panel did not
elaborate on this point. The Panel did not explain how ‘requirements
and procedures’ were somehow fundamentally different from laws,
decrees, regulations’ or why it believed that all SPS measures somehow
have the nature of a ‘requirement’ or ‘procedure’. If we examine
the text of Annex A(1), we note that there is no such separation and a
plain reading might lead one to believe that ‘requirements and
procedures’ are also descriptions of the possible types or ‘forms’
of an SPS measure while the substantive descriptions following ‘including
inter alia‘ are just illustrative examples of the types of SPS
measures Members have imposed.”(565)

457. The Panel in US — Poultry (China) considered that the
first part of Annex A(1) refers to the purpose of the measure while the
second part provides a list of the types of SPS measures. The Panel
observed:

“We note that the first part of Annex A(1)(a) to
(d) refers to an
SPS measure as ‘any measure applied … to protect … to prevent’.
Both parties and the Panel agree that this language refers to the ‘purpose’
of a measure.

The second part of Annex A(1), after having enunciated the
possible purposes for which an SPS measure could be applied, goes on to
provide a list of the types of SPS measures. …”(566)

(iii) Principal and ancillary measures

458. In Australia — Apples, Australia advanced the notion of
a distinction between ancillary and principal measures to support its
argument that many of the measures at issue could not be reviewed under
the SPS Agreement individually, but only in combination with certain
other measures, which were supposedly principal measures. The Panel
rejected this argument noting that Annex A(1) does not mention any
distinction between principal and ancillary measures.(567) The Appellate
Body upheld the Panel’s finding in this regard.(568)

(iv) Substantive SPS measures and procedural requirements

459. The Panel in US — Poultry (China) articulated the
distinction between substantive SPS measures and procedural
requirements. The Panel stated:

“[P]rior panels have discussed the scope of both
Articles 2 and 5
by making a distinction between ‘substantive’ SPS measures taken to
achieve a Member’s ALOP and ‘procedural requirements’. In
particular, the Panel in Australia — Salmon (Article 21.5 —
Canada) made a distinction between risk reduction measures allegedly
needed to achieve a WTO Member’s ALOP, which it called ‘substantive
SPS measures in their own right’ and procedures or information
requirements to check and ensure the fulfilment of sanitary measures
that are subject to Annex C(1)(c) of the SPS Agreement.(569)”(570)

(v) SPS measures’ identification in terms of their
purpose

General

460. In Australia — Apples, the Appellate Body considered
that the word “applied” in the chapeau of Annex A(1) points to the application of the measure and thus suggests that
the relationship of the measure and one of the objectives listed in
Annex A(1) must be “manifest in the measure itself or otherwise
evident from the circumstances related to the application of the measure”.
This led the Appellate Body to conclude that “the purpose of a
measure is to be ascertained on the basis of objective considerations”.(571)

461. The Panel in EC — Approval and Marketing of Biotech
Products, when examining country specific safeguard measures on
genetically modified organisms within the European Communities, stated
that a panel need not limit its inquiry to determining the purpose for
which SPS measures were adopted but also the purposes for which the
measures were maintained and applied:

“[W]e consider that it would not
be appropriate in this case to limit our inquiry to determining the
purposes for which the safeguard measures were adopted. To begin with,
we recall that our task in this case is to determine the purposes for
which the relevant safeguard measures were maintained in August 2003.
Furthermore,
Annex A(1) does not refer to measures ‘adopted’ for one
of the enumerated purposes, but, more broadly, to measures ‘applied’
for one of the enumerated purposes. Moreover, we see nothing in the SPS
Agreement which would bar a Panel from considering purposes which were
not articulated by the member States when they adopted their safeguard
measures. Finally, our approach is consistent with the view expressed by
the Appellate Body that in identifying the purposes of a measure, Panels
need not seek to determine the subjective intent of the legislators or
regulators who adopted the measure. According to the Appellate Body, the
purposes of a measure may and should rather be ascertained on the basis
of objective considerations, for instance by examining whether there is
an objective relationship between the stated purposes and the text and
structural features of the relevant measure.(572)”(573)

SPS measure versus environment protection measure

462. On the basis of the definition of an SPS measure within
Annex A,
the Panel in EC — Approval and Marketing of Biotech Products inferred
that since the measures at issue aim at protecting plant life or health
as part of the environment protection objective, they might well serve
one of the purposes of the SPS Agreement and could therefore be
considered, in this particular circumstance, as SPS measure:

“We note that in accordance with Annex A(1)(a) and
(b) of the SPS
Agreement, the SPS Agreement covers measures applied to
protect animal and plant life or health from certain risks. Thus, to the
extent Directives 90/220 and 2001/18 are applied to protect animals and
plants as part of their purpose of protecting the environment, they are
not a priori excluded from the scope of application of the SPS
Agreement.”(574)

463. In EC — Approval and Marketing of Biotech Products, the
Panel made a distinction between an SPS requirement and an environment
protection measure. Drawing from the 1993 GATT Secretariat Background
Paper, the panel used examples to warn that the purpose of environmental
protection, per se, is not sufficient to bring a measure within
the scope of application of the SPS Agreement, even if the measure
otherwise meets the definition of an SPS measure (e.g., in terms of its
form and nature):

“To provide an example, a measure to reduce air pollution may be
applied to protect the life or health of plants (to the extent that high
levels of air pollution could result in certain plant species lacking
sufficient sunlight for them to exist and survive), and hence to protect
the environment, but it would nonetheless not be a measure applied for
one of the purposes enumerated in Annex A(1) of the SPS Agreement (in
that the measure would not be applied to protect plant life or health
from risks arising from the entry, establishment or spread of pests,
diseases, disease-carrying organisms or disease-causing organisms, or to
prevent other damage from the entry, establishment or spread of pests).”(575)

464. On addressing the exclusion of environmental measures per se from
the scope of application of the SPS Agreement, the Panel in EC —
Approval and Marketing of Biotech Products turned to the 1990 Draft
Text on Sanitary and Phytosanitary Measures circulated by the Chairman
of the Working Group on Sanitary and Phytosanitary Measures. On
consideration of the style used in the draft text, the Panel refrained
from considering that the removal of bracketed texts in that instance
amounts to dismissal of environmental measures from the scope of the SPS
Agreement. The Panel further declined to consider this evidence in the
case at issue:

“We note that the draft text contained bracketed text the
acceptance of which would have meant that ‘measures for the protection
of animal welfare and of the environment, as well as of consumer
interests and concerns’ are ‘SPS measures’ within the meaning of
the Annex A(1) definition.(576) However, the
Annex A(1) definition in the
Chairman’s draft text also contained bracketed text which stated that
‘[r]equirements concerning quality, composition, grading, [consumer
preferences, […], the environment or ethical and moral considerations]
are not included in the definition of sanitary or phytosanitary
measures’. Neither of the two bracketed texts was included in the
final text of the SPS Agreement. Since according to one of the
two bracketed texts measures taken for the protection of the environment
would have been covered by the SPS Agreement, while according to
the other bracketed text such measures would not have been covered, and
since neither text was included in the final text of the SPS
Agreement, we cannot draw the inference that the European
Communities asks us to draw — that the removal of the bracketed text
which would have meant that measures taken for the protection of the
environment are SPS measures implied a decision that such measures
should not be covered by the SPS Agreement. In view of the fact
that neither of the two bracketed texts was included in the final text
of the SPS Agreement, we consider that the Working Group Chairman’s
draft text does not assist us in determining whether all measures
applied to protect from risks to the environment other than risks to the
life or health of animals or plants fall outside the scope of
application of the SPS Agreement.”(577)

(vi) Whether a law, or a requirement contained therein, may be deemed
to embody an SPS measure as well as a non-SPS measure

465. In EC — Approval and Marketing of Biotech Products, the
European Communities requested the Panel to determine “whether a law,
or a requirement contained therein, may, if it meets the applicable
conditions, be considered to incorporate an SPS measure as well as a
distinct measure which falls to be assessed under a WTO agreement other
than the SPS Agreement, such as the TBT Agreement”. The Panel
considered, using a hypothetical example, that the European Communities
view might well be tenable in specific circumstances:

“[W]e consider that to the extent the requirement in the
consolidated law is applied for one of the purposes enumerated in Annex A(1), it may be properly viewed as a measure which falls to be assessed
under the SPS Agreement; to the extent it is applied for a
purpose which is not covered by Annex A(1), it may be viewed as a
separate measure which falls to be assessed under a WTO agreement other
than the SPS Agreement. It is important to stress, however, that
our view is premised on the circumstance that the requirement at issue
could be split up into two separate requirements which would be
identical to the requirement at issue, and which would have an
autonomous raison d’être, i.e., a different purpose which
would provide an independent basis for imposing the requirement.

We recognize that, formally, the requirement at issue constitutes one
single requirement. However, neither the WTO Agreement nor WTO
jurisprudence establishes that a requirement meeting the condition
referred to in the previous paragraph may not be deemed to embody two,
if not more, distinct measures which fall to be assessed under different
WTO agreements. We note that Annex A(1) of the SPS Agreement,
which defines the term ‘SPS measure’, refers to ‘[a]ny measure’
and to ‘requirements’. But these references do not imply that a
requirement cannot be considered to embody an SPS measure as well as a
non-SPS measure.”(578)

466. To further advocate the benefits of considering a single
requirement as embodying an SPS as well as a non-SPS measure, the Panel
in EC — Approval and Marketing of Biotech Products added the
element that, on a procedural level choosing to enact a measure which
embeds SPS and non-SPS provisions is invaluable for a WTO Member.
However, aware of the possible consequences of such an option, the Panel
cautioned that enacting a requirement as an SPS measure and a non-SPS
measure might reveal some intricacies that could prejudice the coherence
of the adopting Member’s legal order:

“In addition to the foregoing considerations, there is another
consideration which we think militates against treating the requirement
at issue as constituting only an SPS measure. To see this, it should
first of all be recalled that, as a general matter, Members impose
requirements because they consider it necessary to do so.(579) If they do
deem it necessary to impose a particular requirement, it is only logical
that they also seek to minimize the risk of a successful legal
challenge, whether before a domestic court or at the WTO. In the case of
our hypothetical example, the Member concerned would face the risk —
for instance, due to uncertainties as to the correct interpretation or
application of relevant WTO provisions — that a WTO Panel would find
the requirement at issue to be WTO inconsistent as an SPS measure but
WTO-consistent as a non-SPS measure, or vice versa, or that a Panel
would find the requirement to be WTO-inconsistent either as an SPS or as
a non-SPS measure.

If the view were taken that the requirement at issue would constitute
an SPS measure only, the Member concerned would have to defend that
requirement as an SPS measure. In view of the possibility that the
requirement at issue might withstand scrutiny by a WTO Panel as a non-SPS measure, but not as an SPS measure, it is reasonable to assume,
however, that, ex abundanti cautela, the Member concerned would
not want to forgo the opportunity of defending the requirement at issue
also as a non-SPS measure. The Member concerned could prevent this by
enacting the requirement at issue twice, either in different laws with a
statement of the appropriate purpose or in the same law as separate
provisions with a statement of their different purpose. However, a
Member might face substantial difficulties in convincing its legislators
of the need for enacting the same requirement twice, whether it be in
different laws or as separate provisions in the same law. Moreover,
pursuing this option might run counter to many Members’ basic
legislative objectives and requirements. It is axiomatic that the
primary objective of legislation is to communicate directives to those
affected by it in a manner that is clear, easily understandable and
reduces uncertainties. By enacting the same requirement twice, in
different laws or as separate provisions in the same law, a Member would
arguably reduce clarity and create a potential for confusion and
uncertainty among those affected by the law. Also, if the same
requirement were enacted twice in different laws, the result would be a
more fragmented domestic legal order.”(580)

467. Having reviewed the benefits within the choice to enact a single
requirement as both SPS and non-SPS measure, the Panel in EC —
Approval and Marketing of Biotech Products conceded that Members
remain free to choose the option which better fits into their needs in
this particular area, taking into account the need to act in accordance
with their legitimate legislative objectives:

“[I]f we were to embrace the view that the requirement in the
consolidated law must be considered to constitute an SPS measure only,
we would effectively impose an unwanted choice on the Member concerned.
The Member could either choose to enact the requirement at issue twice
and thus possibly act inconsistently with sound legislative objectives.
Or it could choose not to enact the requirement twice and thus expose
itself to potential legal risks. We think it would be ill-advised to put
Members in a situation where they effectively have to make this kind of
choice, particularly when it is not imposed by WTO rules. As we have
said, we are unaware of a directive in the WTO Agreement which
says that a requirement can never be deemed to embody two or more
distinct measures which fall to be assessed under different WTO
agreements.

To be clear, we are not saying that Members cannot, or should not,
enact the same requirement twice if they see fit to do so. Plainly,
Members may do so. Our concern is with those Members, and the European
Communities appears to be among them, that see fit not to do so. We
consider that we should not interpret the WTO Agreement in a
manner which would effectively require Members to choose between
enacting a requirement twice, which may be inconsistent with their
internal laws or their legitimate preference, and exposing themselves to
potential legal risks, which may be imprudent.”(581)

(b) Annex A(1)(a)

(i) General

468. The Panel in EC — Approval and Marketing of Biotech
Products held that in order to determine whether the European
Communities’ measures fell within the definition of an SPS measure, it
needed to consider the meaning and scope of particular terms and phrases
in Annex A(1)(a) and whether the potential effects of genetically
modified organisms identified as the purpose behind the European
Communities’ measures meet the definitions of those terms and phrases.

“In order for us to determine whether Directives 90/220 and 2001/18
fall within the scope of Annex A(1)(a), we need to consider the meaning
and scope of some of the terms and phrases used in Annex A(1)(a)
and
address whether certain potential effects of GMOs identified in the
Directives meet the definition of these terms and phrases. Accordingly,
we have structured our analysis below according to certain terms and
phrases used in Annex A(1)(a), including ‘animal or plant life or
health’, ‘risks arising from’, ‘entry, establishment or spread’,
‘pests’ and ‘diseases, disease-carrying organisms or
disease-causing organisms.’ We note that one specific concern which
has been identified in Directives 90/220 and 2001/18 relates to
potential adverse effects of GMOs resulting from the use of antibiotic
resistance marker genes. A separate subsection addresses whether this
concern can be considered to relate to the risks covered in Annex A(1)(a).”(582)

469. The Appellate Body in Australia — Apples made reference
to its prior decision under Article III of the GATT
1994, in determining
whether a measure fell within the scope of Annex A(1)(a). The Appellate
Body stated:

“We consider that the meaning that has been attributed to the
phrase ‘applied … so as to afford protection’ in the context of
Article III:1 of the GATT 1994 may provide some assistance to the
interpretative task before us.(583) The language of
Annex A(1)(a) to the SPS
Agreement is similar to Article III:1 of the GATT
1994, to the
extent that both provisions use the word ‘applied’, and in both
provisions this word is followed by the infinitive of purpose, namely,
‘to protect’ or ‘to afford protection’, respectively. With
regard to Article III of the GATT 1994, the Appellate Body has opined
that, although the purpose of a measure is not easily ascertained, it
can often be discerned from the measure’s design, architecture, and
structure.(584) A similar approach is called for under
Annex A(1)(a) to
the SPS Agreement. Whether a measure is ‘applied … to protect’
in the sense of Annex A(1)(a) must be ascertained not only from the
objectives of the measure as expressed by the responding party, but also
from the text and structure of the relevant measure, its surrounding
regulatory context, and the way in which it is designed and applied. For
any given measure to fall within the scope of Annex A(1)(a), scrutiny of
such circumstances must reveal a clear and objective relationship
between that measure and the specific purposes enumerated in Annex A(1)(a).”(585)

(ii) “to protect animal or plant life or health”

470. The Panel in EC — Approval and Marketing of Biotech
Products found that the phrase “to protect animal or plant life or
health” in Annex A(1)(a) looked to the footnote to the definition and
concluded that the phrase included all types of flora and fauna
including micro- and macro-flora and fauna and target and non-target
organisms:

“[I]t should be recalled that the footnote to the definitions
provided in Annex A of the SPS Agreement states that: ‘For the
purpose of these definitions, ‘animal’ includes fish and wild fauna;
‘plant’ includes forests and wild flora; ‘pests’ include
weeds; and ‘contaminants’ include pesticide and veterinary drug
residues and extraneous matter.’ The term ‘fauna’ is commonly
defined as ‘the animals or animal life of a given area, habitat, or
epoch’, whereas the term ‘flora’ is commonly defined as ‘plants
or plant life of a given area, habitat, or epoch’. The clarification
provided in the footnote to Annex A that the terms ‘animal’ and ‘plant’
include ‘wild fauna’ and ‘wild flora’ indicates to us that the
scope of the phrase ‘animal or plant life or health’ is meant to be
comprehensive in coverage. Moreover, we note that, textually, the
unqualified terms ‘animal’ and ‘fauna’, on the one hand, and ‘plant’
and ‘flora’, on the other, can encompass macro- and micro-fauna, on
the one hand, and macro- and micro-flora, on the other. We also consider
that the terms ‘animal’ and ‘plant’ can encompass both target
and non-target fauna and flora. By ‘non-target’ fauna and flora, we
mean plants and animals (including insects) which are not themselves the
organisms farmers seek to control or eliminate through the cultivation
of GM crops, but which are affected by the cultivation of the GM crop,
including through consumption of components of the GM plants (e.g.,
pollen). In the light of this, we consider that non-target
microorganisms, such as soil or aquatic micro-organisms, are ‘animals’
or ‘plants’ within the meaning of Annex A(1).(586)”(587)

(iii) “risks arising from”

471. The Panel in EC — Approval and Marketing of Biotech
Products, relying on dictionary meanings, found that the phrase “risks
arising from” as used in Annex A(1)(a) meant “occur as a result of”:

“The Panel notes that the dictionary defines the phrasal verb ‘to
arise from’ as meaning ‘occur as a result of’. Thus, the phrase
‘risks arising from’ indicates that the relevant risks to animal or
plant life or health must occur as a result of some event, substance,
condition, etc. In the specific context of Annex A(1)(a), the phrase ‘risks
arising from’ implies that the risks to animal or plant life or health
must occur as a result of a pest, disease, disease-carrying organism or
disease-causing organism.”(588)

(iv) “entry, establishment or spread”

472. In EC — Approval and Marketing of Biotech Products, the
Panel, on addressing the SPS criteria of the measures at issue, ruled on
whether the purpose of the measures was concerned with the “entry,
establishment or spread” of pests, diseases, etc.:

“It is clear to us that the purpose of avoiding disease in general
includes the purpose of avoiding, more specifically, the ‘entry,
establishment or spread’ of ‘diseases’. (…) We think that the
purpose of avoiding ‘pest effects’ of GMOs includes the purpose of
avoiding the ‘entry, establishment or spread’ of GMOs as ‘pests’.…
In the light of this, we are satisfied that Directives 90/220 and
2001/18 can be considered to constitute measures applied to protect
against risks arising from the ‘entry, establishment or spread’ of, inter
alia, disease and ‘pest effects’ which may be caused by GMOs.”(589)

(v) “pests”

Definition

473. The Panel in EC — Approval and Marketing of Biotech
Products found that in the context of the SPS Agreement the term “pests”
should be understood as referring to an animal or plant which is
destructive, or causes harm to the health of other animals, plants, orhumans, or other harm, or a troublesome or annoying animal or plant:(590)

“The Panel notes at the outset that three of the subparagraphs of
Annex A(1) to the SPS Agreement, namely, Annex
A(1)(a), A(1)(c) and A(1)(d), identify ‘pests’ as a possible source of risks. The word
‘pest’ ordinarily means ‘a troublesome, annoying or destructive
person, animal, or thing’. In applying this definition to Annex
A(1),
we find two contextual elements in particular to be noteworthy. The
first is the previously mentioned footnote to the definitions provided
in Annex A of the SPS Agreement. It specifies that, for the purposes of
the SPS Agreement, the term “pest” includes weeds. Weeds are plants.
Therefore, we consider that the term ‘pest’ in Annex
A(1) must be
understood to cover plants in addition to animals. The other element
which we find instructive are the references in Annex A(1)(a) and
A(1)(c) to ‘animal or plant life or health’ and ‘human life or
health’ as well as the reference in Annex A(1)(d) to ‘other damage’.
It is apparent from these references that the SPS Agreement is intended
to be applicable, not just to measures taken to protect against risks
which pose a threat to the life, and thus the very existence, of
animals, plants or humans, but also to measures taken to protect against
risks to the ‘health’ of animals, plants or humans, and to measures
taken to prevent other ‘damage’ within the territory of a Member. In
the light of this, we consider that the term ‘pest’ should be
interpreted to cover ‘destructive’ animals or plants — that is
animals or plants which destroy the life and threaten the very existence
of other animals, plants or humans. Equally, however, we think that, for
the purposes of the SPS Agreement, the term ‘pest’ should be
interpreted to cover animals and plants which cause other, less serious,
deleterious effects, namely, animals and plants which cause harm to the
health of animals, plants or humans or which cause other harm.”(591)

Whether pests must be living organisms

474. Rejecting the European Communities’ view that pests are meant
to be living organisms, the Panel in EC — Approval and Marketing of
Biotech Products argued that pests do not need to be alive to be
considered as liable to exert harmful damages to life or health:

“The European Communities has argued that a pest must be a living
organism. We have previously noted that the term ‘pest’ in Annex
A(1) encompasses plants which are destructive, or which cause harm to
the health of other animals, plants or humans. While it may be true that
many organisms will lose their ability to act as pests if they are no
longer alive, we are not persuaded that this is necessarily always the
case. In particular, we are not convinced that all plants which are
pests as living organisms cease to be destructive or harmful to health
immediately after being harvested.”(592)

475. In EC — Approval and Marketing of Biotech Products, the
Panel provided the definition of the terms “diseases, disease-carrying
organisms or disease-causing organisms”, in light of the ordinary
meanings given to these words by the World Health Organization:

“The Panel observes that the common definition of the term ‘disease’
as it appears in Annex A(1)(a) is ‘a disorder of structure or function
in an animal or plant of such a degree as to produce or threaten to
produce detectable illness or disorder’. The World Health Organization
(hereafter the ‘WHO’) defines disease as ‘[a] pathological
condition of the body that presents a group of clinical signs, symptoms,
and laboratory findings peculiar to it and setting the condition apart
as an abnormal entity differing from other normal or pathological
conditions (CMD 1997)’. Regarding the term ‘disease-carrying
organisms’ and ‘disease-causing organisms’ in Annex A(1)(a), we
note that the WHO defines a disease-carrying organism as a ‘vector’
and a disease-causing organism as a ‘pathogen’.”(593)

(c) Annex A(1)(b)

(i) General

476. As with the methodology it followed for the previous
subparagraph of Annex A, the Panel in EC — Approval and Marketing
of Biotech Products assessed the compliance of the measures at issue
with the provisions of Annex A(1)(b) by referring to the ordinary
meaning given to the concepts in question within the provisions of Annex
A:

“We now turn to analyse whether Directives 90/220 and 2001/18 fall
within the scope of Annex A(1)(b) of the SPS Agreement. As we
have done above with regard to Annex A(1)(a), we will structure our
analysis below according to certain terms and phrases used in Annex
A(1)(b), including ‘foods, beverages or feedstuffs’, ‘additives’,
‘contaminants’ and ‘toxins’. The Parties have also addressed
concerns relating to potential effects of allergens on human and animal
health in the context of Annex A(1)(b), hence we will also consider
these concerns below.”(594)

(ii) “foods, beverages or feedstuffs”

477. The Panel in EC — Approval and Marketing of Biotech
Products used the dictionary definition of the individual terms in
the phrase “foods, beverages or feedstuffs” and found that
genetically modified crops eaten by animals can be considered feedstuffs
and food:

“The Panel notes that the common definition of a ‘food’ is a
substance taken into the body to maintain life and growth. Thus, we
consider that a substance which a human being or an animal consumes for
nutritional reasons may be classified as a ‘food’. A ‘feedstuff”
on the other hand is defined as fodder, and ‘fodder’ is defined as
‘food for cattle, horses, etc., and more specifically as dried food,
as hay, straw, etc., for stall-feeding’.

Applying these definitions in the context of this dispute, we
consider that a GM crop grown for the explicit purpose of providing food
to animals, and in particular to farmed animals, would qualify as a “feedstuff”.
A GM crop that has been grown for a different purpose, but is eaten by
animals, including wild fauna(595), can be considered to be a ‘food’
for that animal. This would include, for example, pollen of the GM crop
which is consumed by insects and GM plants consumed by non-target
insects, deer, rabbits or other wild fauna. Contrary to the European
Communities, we think GM seeds used for sowing purposes could also be
considered animal “food”, for instance if these seeds are spilled
next to a field or on a farm and are subsequently eaten by birds, etc.”(596)

(iii) “additives”

Concept

478. The Panel in EC — Approval and Marketing of Biotech
Products relied on the dictionary and the Codex definition of “additive”
to find that a gene could be considered a food additive:

“The Panel notes that the New Shorter Oxford English Dictionary
defines ‘additives’ as ‘a substance added to another so as to give
it specific qualities’. Given that Annex A(1)(b)
is concerned with
additives in foods, we also find informative that Codex defines a ‘food
additive’ as: ‘Food additive means any substance not normally
consumed as a food by itself and not normally used as a typical
ingredient of the food, whether or not it has nutritive value, the
intentional addition of which to food for a technological (including
organoleptic) purpose in the manufacture, processing, preparation,
treatment, packing, packaging, transport or holding of such food
results, or may be reasonably expected to result, (directly or
indirectly) in it or its by-products becoming a component of or
otherwise affecting the characteristics of such foods. The term does not
include ‘contaminants’ or substances added to food for maintaining
or improving nutritional qualities.’ The Panel is not convinced by the
European Communities’ categorical assertion that genes cannot be
considered substances. A ‘substance’ is defined as the ‘real physical
matter of which a person or thing consists’. It is our understanding
that genes may be considered as ‘real physical matter’. We do not
dispute that genes contain and encode instructions for the creation of
various substances. However, this does not exclude that genes may
themselves constitute substances.”(597)

Relevance of Codex

479. Although the Panel in EC — Approval and Marketing of
Biotech Products utilized the Codex definition of additives in its
interpretation of Annex A(1)(b), it found that the Codex definition was
not dispositive.(598) The Panel found that the specific reliance on
international standards found in Article 3 and
Annex A(3) of the SPS
Agreement did not apply to Annex A(1):

“In any event, the Codex definition is not dispositive of the
meaning of the term ‘additives’ as it appears in Annex
A(1)(b). We
are aware that pursuant to Article 3(1) of the SPS Agreement Members are
to base their SPS measures on ‘international standards, guidelines and
recommendations’, where they exist, and that in accordance with Annex
A(3)(a) of the SPS Agreement, Codex standards relating to food additives
are relevant ‘international standards’ within the meaning of Annex
A(3)(a).(599) However, unlike
Article 3(1) and Annex
A(3), Annex A(1)
makes no reference to ‘international standards, guidelines and
recommendations’. Had the drafters of the SPS Agreement intended for
terms like ‘additives’ to have the meaning given to them by
definitions contained in relevant international standards, etc., we
think Annex A(1) would have made this clear.(600) Looking at the text of
Annex A(1)(b), we note that it broadly, and simply, refers to ‘additives’
‘in foods’.”(601)

(iv) “contaminants”

480. The Panel in EC — Approval and Marketing of Biotech
Products also examined the term “contaminants” and found that it
must mean something distinct from an “additive”. After examining
dictionary and Codex definitions as well as the footnote to Annex
A, the
Panel found that for a substance to be a contaminant the presence of the
infecting or polluting substance would have to be unintentional:

“The Panel notes that the common meaning of a contaminant is ‘a
substance which pollutes, corrupts or infects’. We also note that the
footnote to Annex A to the SPS Agreement states in relevant part that
‘[f]or purposes of these definitions […] ‘contaminants’ include
pesticide and veterinary drug residues and extraneous matter’. These
definitions have in common the fact that they refer to substances which
are not intentionally added to food. This view is consistent with the
abovementioned Codex definition of ‘contaminant’, which refers to
any substance not intentionally added to food, and which is present in
such food as a result of the production, processing, packaging, etc., or
as a result of environmental contamination.

Based on the above elements, and noting that the term ‘contaminants’
must be interpreted so as to have a meaning that differs from the
meaning of the term ‘additive’ which also refers to substances, we
consider that a critical element for determining whether a substance can
be considered to be a ‘contaminant’ is that the presence of the
substance which is said to ‘infect or pollute’ be unintentional. For
this reason, we consider that genes intentionally added to GM plants
that are eaten or used as inputs into processed foods would not be ‘contaminants’
in and of themselves. Furthermore, we think that substances such as
proteins which are produced by GM plants, and which are intended, should
not be considered to be ‘contaminants’. However, we agree with
Canada that proteins produced through the unintended expression of
modified genes in agricultural crops may be considered ‘contaminants’
within the meaning of
Annex A(1)(b), if these proteins ‘infect or
pollute’ the food product.”(602)

(v) “toxins”

Definition

Relevance of the criteria related to “unintentional addition to
food”

481. In EC — Approval and Marketing of Biotech Products, the
Panel examined the ordinary meaning of the term toxin having regard to
the definitions provided under the Codex Alimentarius and other relevant
texts. From these definitions, the Panel ruled that “unintentional
addition to food” is not an element of the definition of “toxin”:

“The Panel notes that common definitions of a ‘toxin’ are ‘a
poison produced by a microorganism or other organism and acting as an
antigen in the body’ or ‘any poisonous antigenic substance produced
by or derived from microorganisms, which causes disease when present at
low concentration in the body’. Codex Standard 193 defines two types
of toxins in the context of describing the general standard for
contaminants and toxins in foods. One is a my cotoxin defined as ‘a
toxicant that is produced as a toxic metabolite of certain micro fungi
that are not intentionally added to food.’ The other is a microbial
toxin defined as ‘toxicants that are produced by algae and that may be
accumulated in edible aquatic organisms such as shellfish’. FAO
defines a toxin as ‘a compound produced by one organism, which is
deleterious to the growth and/or survival of another organism of the
same or different species’. We note that these definitions do not
suggest that toxins in foods are inherently substances which have been
unintentionally added to foods. To be sure, every effort is ordinarily
made to avoid the presence of toxins in foods. Nonetheless, a toxin
specific to a particular pest is sometimes deliberately added to a food
for the purpose of controlling or eradicating that target pest.”(603)

482. The Panel in EC — Approval and Marketing of Biotech
Products examined the term “toxin” as used in paragraph (1)(b)
and found that, unlike contaminants, the addition of the toxin to the
food or feedstuff does not need to be unintentional.

“The European Communities argues that the toxins produced by
insecticidal GM plants to kill the target insect are not ‘covered’
by Annex A(1)(b) since the production by the GM plant of the toxins is
intentional and since it is not possible to kill the target insect and
at the same time seek to protect the life and health of those very
insects. In our view, the mere fact that the toxin is intentionally
produced in the GM plant would not necessarily remove any concerns
relating to the toxic effect on the target insect from the scope of Annex A(1)(b). For it could be argued, not implausibly, that the
insecticide-producing GM plant constitutes a ‘toxin’ in the food of
the target insect which poses a risk to the life and health of the
target insect. However, the target insect in the European Communities’
example is assumed to be a recognized pest. Accordingly, the release of
insecticide-producing GM plants into the environment would normally be
controlled, not to protect the life or health of the target insect from
risks arising from the release of the GM plant, but to protect the life
or health of non-target organisms, etc., from any risks arising from the
release of the GM plant.”(604)

Relevance of the poisonous effect of the toxins

483. The Panel in EC — Approval and Marketing of Biotech
Products rejected the argument of the European Communities that the
term “toxin” should be construed narrowly so that a measure aimed to
protect animal, plant or human life from an allergen would not fall
under the definition of an SPS measure in paragraph
(1)(b). The Panel
stated:

“We see nothing in Annex A(1) or in the ordinary meaning of the
term ‘toxin’ which indicates that for a substance to qualify as a
‘toxin’ in a food or in a feedstuff, the substance needs to be
poisonous for each and every human being or animal which is exposed to
it through the consumption of the food or feedstuff. Indeed, we find it
difficult to believe that the term ‘toxins’ was intended to have
such a narrow meaning. If that were the case, a measure applied by a
Member to protect human health from risks arising from substances
present in food which are poisonous for only a small fraction of its
population would not be subject to the disciplines of the SPS Agreement.
Conversely, a measure applied to protect from risks arising from
substances present in food which are poisonous for the entire population
would be subject to the SPS Agreement. In our view, it would be
incongruous if Members were subject to stricter disciplines when it
comes to controlling risks affecting the entire population than they
would be when they seek to control risks affecting only a small segment
of their population. Also, the measures taken in either case might have
equivalent effects on trade.”(605)

Allergens as toxins

Definition of allergens

484. In addressing parties’ concerns on potential allergic
responses to GMOs in the context of Annex A(1)(b), the Panel in EC
— Approval and Marketing of Biotech Products first noted that
Annex A(1)(b) does not mention allergenicity as a food safety concern.
The Panel then examined whether allergens in foods or feedstuffs could
nevertheless be considered to fall within the category of toxins and
therefore be included in the definition of
Annex A(1)(b):

“The term ‘allergen’ is commonly defined as ‘a substance that
causes an allergic reaction’. The term ‘allergic’ is defined as
‘of, caused by, or relating to an allergy’, and the term ‘allergy’
is defined in turn as ‘a damaging immune response by the body to a
substance to which it has become hypersensitive’. It may be inferred
from these definitions that an ‘allergen’ is a substance which
causes a damaging immune response by the body in humans or animals which
have become hypersensitive to that substance. This is consistent with
the definition of ‘allergen’ provided in the FAO Glossary of
Biotechnology for Food and Agriculture, which describes an allergen as
‘an antigen that provokes an immune response’.

With specific reference to the products at issue in this dispute, we
add that, in our understanding, allergens would be proteins generated
through the expression of genes. Thus, the concern about potential
allergenicity of GMOs relates to the effect of modified genes on protein
composition in GM plants and the subsequent exposure of humans or
animals to these proteins through the consumption of food or feedstuffs
produced using the GM plants.”(606)

Inclusion of allergens in the categories within Annex A

485. Having reviewed the definitions of allergens, the Panel in EC
— Approval and Marketing of Biotech Products ruled that allergens
could be considered as toxins in light of their definition and the
damaging effect that they may have on life and health:

“[T]he Complaining Parties argue that ‘allergens’ would
generally meet the definition of the term ‘toxins’ as it is used in
Annex A(1)(b). We have stated earlier that the term ‘toxin’ in
Annex A(1)(b) can be understood to refer to a poisonous substance produced by
a micro-organism or other organism and acting as an antigen in the body.
A ‘poison’ is commonly defined as ‘a substance that causes death
or harm when introduced into or absorbed by a living organism’, or as
‘a substance that through its chemical action is able to kill, injure,
or impair an organism’.

We have said that allergens may be understood as substances which act
as antigens and cause a damaging immune response by the body in humans
or animals. From the information submitted to us, we understand that
such immune responses can be very damaging to health, and in some cases
may even be fatal, e.g., in the event of an anaphylactic shock.
In the light of this, it seems to us to be correct to characterize food
allergens as substances which can ‘cause death or harm’ to health,
or as substances which through their chemical action are able to ‘kill,
injure or impair an organism’. Thus understood, the kind of food
allergens which might be produced by GMOs can be appropriately viewed as
poisonous substances produced by an organism and acting as an antigen in
the body. Consequently, we think that for the specific purposes of Annex
A(1) the term ‘toxins’ encompasses, inter alia, food
allergens which might be produced by GMOs. We observe in this connection
that we have seen no evidence establishing that the drafters of the SPS
Agreement intended to exclude food allergens from the scope of the SPS
Agreement in general, and the term ‘toxins’ in particular.”(607)

(d) Relationship between Annex A(1)(a) and Annex A(1)(b)

486. In Australia — Salmon, the Panel examined whether an
Australian prohibition on imports of dead salmon was a “sanitary
measure” within the meaning of paragraph 1(b) of Annex A of the SPS
Agreement. The Panel found that while the definition in Annex A(1)(a) is
broad and covers measures intended to protect animal or plant life or
health from risks arising as a result of pests and diseases, Annex
A(1)(b) focuses on measures intended to protect human or animal life or
health from disease-causing organisms contained in food, beverages or
feedstuffs. The Panel held:

“In the circumstances at hand, we consider that the definition of a
‘sanitary measure’ in paragraph 1(a) encompasses the coverage sought
by Australia under the definition in paragraph 1(b). The definition in
paragraph 1(a) deals with risks arising from ‘the entry, establishment
or spread of pests, diseases … or disease-causing organisms’ in
general. In the context of disease-causing organisms, the definition in
paragraph 1(b) is limited in the sense that it only addresses risks
arising from ‘disease-causing organisms in foods, beverages or
feedstuffs’ (hereafter also referred to as food-borne risks). We are
of the view that, even though both definitions of a ‘sanitary measure’
invoked by Australia might be applicable to the measure in dispute, the
objectives for which that measure is being applied are more
appropriately covered by the definition in paragraph
1(a). These
objectives have been clearly expressed by Australia on several
occasions.”(608)

488. In the context of analysing the broader issue of potential
allergenic effects of GMOs which are not used as or in foods within the
meaning of Annex A(1)(c) of the SPS Agreement, the Panel in EC —
Approval and Marketing of Biotech Products considered the issue of
exposure of persons working, or otherwise coming into contact, with GMOs
by means other than through food. For the Panel, what was at issue was
the potential of GMOs to produce allergenic effects when not used as or
in foods. The Panel took the view that if GMOs’ allergenicity was
established in the latter context, they could be considered as pests:

“We consider that if interaction with, and exposure to, GMOs other
than as or in a food produced allergenic effects in persons, the GMOs in
question could be viewed as ‘pests’ within the meaning of Annex
A(1). We recall our view that the term ‘pests’ in Annex A(1)
encompasses plants which are destructive, or which cause harm to the
health of other animals, plants or humans. We also recall our view that
allergens may be understood as substances which cause a damaging immune
response by the body in humans, and that such immune responses can be
very damaging to health, and in some cases may even be fatal, e.g.,
in the event of an anaphylactic shock. In the light of this, we consider
that to the extent a GM plant produces allergenic effects other than as
a food, it would be a plant which causes harm to the health of humans
and, as such, would qualify as a ‘pest’. We recognize that a GM crop
producing this type of allergenic effects would often be cultivated
intentionally. From the perspective of the farmer cultivating the GM
crop, the GM crop would not, therefore, constitute a ‘pest’.
However, from the perspective of the farm worker who is in contact with
the crop in the field, or a person walking past the field, the GM crop
may constitute a ‘pest’ if the person is hypersensitive to the
allergen.”(609)

489. In EC — Approval and Marketing of Biotech Products, the
Panel discussed the issue of introduction of herbicide-resistant GM
plants to the extent that this introduction might lead to the use of
herbicides in the field when no herbicides were previously used and
increase use of herbicides or use of different herbicides. As this
introduction might in turn cause harm to human health, the Panel
endorsed the European Communities’ hypothesis that the relevant harm
deriving from the use of pesticides would not be the result of herbicide
residues in the GM plant, but of exposure to the herbicide other than
through the consumption of the GM plant. The Panel stated:

“[I]t may be that the European Communities’ concern about
possible negative health effects relates to improper use, or
unanticipated effects, of approved herbicides. We therefore proceed with
our analysis, assuming that there may be situations where the use of
approved herbicides could cause harm to the health of persons applying
the herbicide in the field or otherwise coming into contact with it.

…

[I]n relation to the scenario involving adverse effects on human
health, it is clear to us that the weeds against which a particular
herbicide is used qualify as ‘pests’ within the meaning of Annex
A(1), and that the herbicide use constitutes a pest control measure. We
likewise consider that risks to human health resulting from the use of a
herbicide, or of a different herbicide, may be viewed as arising
indirectly from the entry, establishment or spread of weeds qua relevant
pests.

…

The GM plants, the herbicide and the weeds being interlinked in this
way, we consider that there is a rational relationship between
controlling the release into the environment of herbicide tolerant GM
plants and the purpose of protecting human health from risks arising
indirectly from the entry, spread or establishment of weeds. We recall
in this context that there is nothing in the text of Annex
A(1) to
suggest that the product subject to an SPS measure — in this case, a
herbicide tolerant GM plant to be released into the environment — need
itself be the pest which gives rise, directly or indirectly, to the
risks from which the measure seeks to protect.”(610)

(f) Annex A(1)(d)

(i) “other damage”

490. The Panel in EC — Approval and Marketing of Biotech
Products analysed the term “other damage” as it is used in Annex
A(1)(d) and concluded that it must comprise damage other than damage to
the life or health of plants, animals or humans, because these are
covered by paragraphs (1)(a), (1)(b) and
(1)(c). The Panel noted that
“other damage” could include a broad range of possibilities,
including damage to property, economic damage and damage to the
environment other than damage to the life or health of living organisms:

“The Panel considers that it may be inferred from the reference in
Annex A(1)(d) to “other damage” (emphasis added) that like Annex
A(1)(d), sub-paragraphs (a) through (c) of Annex A(1) refer to measures
which are applied to protect from a certain kind of potential ‘damage’.
The ‘damage’ at issue in sub-paragraphs (a) through
(c) of Annex
A(1) is damage to plant, animal or human life or health. It follows,
therefore, that the category of ‘other damage’ covered by Annex
A(1)(d) must comprise damage other than damage to the life or health of
plants, animals or humans. This is indeed the view expressed by all of
the Parties.

The residual category of ‘other damage’ is potentially very
broad. In our view, ‘other damage’ could include damage to property,
including infrastructure (such as water intake systems, electrical power
lines, etc.). In addition, we think “other damage” could include
economic damage (such as damage in terms of sales lost by farmers). The
dictionary defines the term ‘damage’ as ‘physical harm impairing
the value, usefulness, or normal function of something’ and ‘unwelcome
and detrimental effects’, or ‘a loss or harm resulting from injury
to person, property, or reputation’. These definitions cover harm
resulting in a reduction of economic value, adverse economic effects, or
economic loss. Also, interpreting ‘other damage’ to include economic
damage is consistent with the context of Annex
A(1)(d). Article 5.3 of
the SPS Agreement states that relevant ‘economic factors’ to be
taken into account in a risk assessment include ‘the potential damage
in terms of loss of production or sales in the event of the entry,
establishment or spread of a pest or a disease’. Thus, Article 5.3
shows that the SPS Agreement elsewhere uses the term ‘damage’ in an
economic sense, and it does so in connection with damage from ‘pests’.
Thus, Article 5.3 contemplates a similar situation to that contemplated
in Annex A(1)(d).”(611)

(ii) Relationship with other provisions of the SPS Agreement

Article 5.3

491. The Panel in EC — Approval and Marketing of Biotech
Products held that Article 5.3 contemplates a similar situation to
that contemplated in Annex A(1)(d) in the interpretation of the word “damage”.
The Panel noted that the definition of “damage” covers harm
resulting in a reduction of economic value, adverse economic effects, or
economic loss.(612)

(g) Annex A(1) second paragraph

(i) General

492. For a discussion of whether this paragraph provides for two
elements — form and nature — that define SPS measures, refer to
paragraphs 452 and 453 above.

493. The Appellate Body in Australia — Apples discussed the
meaning of the first line of Annex A(1) second paragraph: “Sanitary or
phytosanitary measures include all relevant laws, decrees, regulations,
requirements and procedures …”. The Appellate Body emphasized the
significance of the words “include”, “all” and “relevant”
and stated that:

“We note that this last sentence of Annex A(1) follows, and relates
to, all of the first sentence, including all of the purposes enumerated
in subparagraphs (a) through (d). The first part of this sentence
contains a list of legal instruments linked by the conjunction ‘and’
(‘laws, decrees, regulations, requirements and procedures’). This
list is modified by the words ‘include’ and ‘all relevant’. The
word ‘relevant’ is, in our view, a key element within this sentence.
We see ‘relevant’ as a reference back to the preceding sentence in
Annex A(1), that is, to the list of specific purposes that are the
defining characteristic of every SPS measure. The words ‘include’
and ‘all’, which also introduce the list of instruments, suggest
that the list is both illustrative and expansive. Taken together, the
words ‘include’ and ‘all relevant’ therefore suggest that
measures of a type not expressly listed may nevertheless constitute SPS
measures when they are ‘relevant’, that is, when they are ‘applied’
for a purpose that corresponds to one of those listed in subparagraphs
(a) through (d). Conversely, the fact that an instrument is of a type
listed in the last sentence of Annex A(1) is not, in itself, sufficient
to bring such an instrument within the ambit of the SPS Agreement.”(613)

(ii) “all relevant laws, decrees, regulations”

494. In EC — Approval and Marketing of Biotech Products, the
Panel noted that the second paragraph of Annex A(1) provides that SPS
measures include “all relevant laws, decrees [and] regulations,”
which suggests that the SPS Agreement does not prescribe a particular
legal form and that SPS measures may in principle take many different
legal forms:

“Whether a particular DSU measure constitutes, at the same time, an
SPS measure is to be determined, according to the above definition, by
reference to such criteria as the objective of the measure, its form and
its nature. Regarding the objective of SPS measures, subparagraphs (a)
through (d) indicate that SPS measures must ‘be applied’ to protect
against certain enumerated risks. Regarding the form of SPS measures,
the second paragraph of the definition provides that SPS measures
include ‘all relevant laws, decrees [and] regulations’. This
enumeration suggests that the SPS Agreement does not prescribe a
particular legal form and that SPS measures may in principle take many
different legal forms. Finally, in relation to the nature of SPS
measures, the second paragraph stipulates that SPS measures include ‘requirements
and procedures’. The second paragraph then goes on to mention, by way
of example, a number of relevant substantive requirements (prescribed
end product criteria, prescribed quarantine treatments, certain
packaging and labelling requirements, etc.) and procedures (testing
procedures, inspection procedures, certification procedures, approval
procedures, etc.). We note that the term ‘requirements’ is broad in
scope. For instance, both an authorization to market a particular
product and a ban on the marketing of a particular product may be
considered ‘requirements’, in that one is effectively a requirement
to permit the marketing of a product and the other a requirement to ban
the marketing of a product.”(614)

(iii) “requirements and procedures”

495. The Panel in EC — Approval and Marketing of Biotech
Products found that the reference to “requirements and procedures”
in the definition of an SPS measure, as contained in Annex
A(1), does
not include the application of such requirements and procedures. With
respect to the European Communities’ general moratorium on approving
the applications to place on the market genetically modified organisms,
the Panel determined that the decision to apply a general moratorium was
a decision concerning the application, or operation of procedures and as
such was not an SPS measure within the meaning of Annex
A(1)(615):

“Still in relation to the reference in the second paragraph of
Annex A(1) to ‘requirements and procedures’, we note that no
reference is made to the ‘application’ of ‘requirements and
procedures’. This omission suggests that whereas requirements and
procedures as such may constitute SPS measures, the application of such
requirements and procedures would not, itself, meet the definition of an
SPS measure. The provisions of the SPS Agreement support the view that
the omission of a reference to ‘application’ is deliberate, for
there are several provisions which establish obligations specifically
with regard to the ‘application’ of SPS measures. For instance,
Article 2.3, second sentence, states that SPS measures ‘shall not be
applied in a manner which constitutes a disguised restriction on
international trade’. Similarly, Article 10.1 states in relevant part
that ‘[i]n the preparation and application of [SPS] measures, Members
shall take account of the special needs of developing country Members’.
Finally, we note that Article 8 draws a distinction between, on the one
hand, the ‘operation’ of procedures and, on the other hand, the ‘procedures’,
which, themselves, are defined in Annex A(1) as SPS measures.

…

We have characterized the decision to apply a general moratorium on
approvals as a procedural decision to delay final substantive approval
decisions. In our assessment, this procedural decision did not impose a
substantive ‘requirement’ in relation to biotech products with
pending or future applications. It neither approved nor rejected
applications. Similarly, we are of the view that the decision to delay
final substantive approval decisions cannot appropriately be viewed as
providing for a ‘procedure’, considering that it did not itself
establish a new procedure or amend the existing EC approval procedures.
We have said that the decision to delay final approval decisions was
procedural in nature insofar as it was a decision relating to the
application, or operation, of the existing EC approval procedures.
However, the mere fact that the decision in question related to the
application, or operation, of procedures does not turn that decision
into a procedure for the purposes of Annex A(1).

Based on these considerations, we conclude that the European
Communities’ decision to apply a general moratorium on approvals was a
decision concerning the application, or operation, of procedures. As
such, it did not provide for ‘requirements [or] procedures’ within
the meaning of Annex A(1).”(616)

496. Although the Panel in EC — Approval and Marketing of
Biotech Products found that the phrase “requirements and
procedures” did not include the application of those requirements and
procedures, it did find that the term “requirements” is unqualified
and can apply to general regulatory requirements or requirements imposed
on a specific product:

“It should be added in this context that the term ‘requirements’
as it appears in the second paragraph of Annex A(1) is unqualified and
thus is applicable both to requirements which are generally applicable
and to requirements which have been imposed on specific products.(617) In
our view, the application of a generally applicable SPS ‘requirement’
(e.g., a pre-marketing approval requirement for biotech products) to a
specific product may result in a different, product-specific SPS ‘requirement’
(e.g., a ban on the marketing of a specific biotech product). In other
words, there may be cases where the application of an SPS ‘requirement’
and, hence, of an SPS measure, may give rise to a new SPS requirement
and, hence, a new SPS measure. Applying these considerations to Article
5.1, it could be argued that a generally applicable SPS requirement as
set out, e.g., in a law and a product-specific decision based on that
requirement might both constitute SPS measures which must be based on a
risk assessment.”(618)

(iv) “labelling requirements”

General

497. In EC — Approval and Marketing of Biotech Products, the
Panel ruled that Annex A of the SPS Agreement encompasses not only
labelling requirements related to food safety(619) but also other
labelling requirements. The Panel concluded that the labelling
requirement in the measure at issue in that dispute fell within the
scope of the SPS Agreement:

“We note that Annex A(1) to the SPS Agreement specifies that
SPS measures include, ‘inter alia‘, ‘packaging and
labelling requirements directly related to food safety’. As is
indicated by the term ‘inter alia’ in Annex
A(1), the
requirements specifically mentioned are not necessarily intended to
exclude similar requirements. Hence, while recognizing that labelling
requirements imposed on food safety grounds may be more common, we
consider that labelling requirements imposed for the purpose of
protecting plant, animal or human health from the risks covered in Annex
A(1)(a) and (c), or for the purpose of preventing or limiting other
damage from the risk covered in Annex A(1)(d), would likewise be subject
to the disciplines of the SPS Agreement.

… To the extent [the labelling requirement in Directive 2001/18] is
applied to protect the environment, it would fall within the scope of
Annex A(1)(a), (b) or (d), depending on what the adverse effects would
be. To the extent it is applied to protect human health, it would fall
within the scope of Annex A(1)(b) or (c). Thus, we consider that the
labelling requirement in question does not remove Directive 2001/18 from
the scope of the SPS Agreement.”(620)

498. The Panel in EC — Approval and Marketing of Biotech
Products, having agreed that labelling requirements fell within the
scope of the SPS Agreement, declined however, to rule on the consistency
of these measures with the Agreement, arguing that such an examination
goes beyond its mandate in the dispute at issue:

“We stress that our finding that the labelling requirement in
Directive 2001/18 falls within the scope of the SPS Agreement does
not necessarily imply that the requirement is consistent with the
provisions of that Agreement. The consistency of the relevant
requirement with the SPS Agreement is an issue that is not before
us, and so we refrain from expressing a view on it.”(621)

Purpose of labelling requirements

499. With respect to the relevance of labelling requirements in the
context of Annex A, the Panel in EC — Approval and Marketing of
Biotech Products examined whether the labelling requirement in one
of the measures at issue is linked to the purpose of protecting human
health and the environment and hence is a measure applied for one of the
purposes identified in Annex A(1)(622):

“Explicit identification of the presence of a GMO alerts and
sensitizes operators and users of a product containing or consisting of
a GMO to the possibility that any observed adverse effects of the
product on human health or the environment might be attributable to the
presence of a GMO as opposed to other factors. Increased awareness of
operators and users of the presence of GMOs may be presumed to lead to a
situation where more observations which could be indicative of risks
associated with a GMO are reported to consent holders and competent
authorities, or where relevant observations are reported more promptly.
Explicit identification of the presence in a product of a GMO may thus
be presumed to result in consent holders and competent authorities being
better informed, or informed more promptly, than they otherwise would be
of unanticipated risks of a GMO to human health and the environment,
allowing them to determine whether additional measures are necessary to
protect human health and the environment.

Additionally, we observe that explicit identification of the presence
in a product of a GMO serves the purpose of health and/or environmental
protection in situations of unexpected, accidental release of a GMO — e.g.,
in connection with its storage or transport — into an environment in
which the GMO is not be used or in which the potential for adverse
effects has not specifically been considered in the risk assessment. In
such situations, it can, in our view, be presumed that explicit
identification of the presence in a product of a GMO will result in
consent holders and competent authorities being more promptly and more
effectively informed of any relevant incidents than would be the case if
the product being stored or transported did not explicitly identify the
presence of a GMO. To use again the example of storage or transport, we
note that persons storing or transporting GMOs (e.g., the driver
of a transportation vehicle) need not necessarily be persons under the
supervision of the producer or user of GMOs or persons otherwise
familiar with the specific characteristics of the product they are
handling. For such persons in particular, explicit identification of the
presence of a GMO renders more likely, and facilitates, an adequate and
prompt response in situations of unexpected, accidental release of a GMO
into the environment.”(623)

(v) “directly related to food safety”

500. In EC — Approval and Marketing of Biotech Products, the
Panel noted that “[t]he term ‘food safety’ as it is used in the
Agreement encompasses the safety of such substances as food additives,
contaminants (including pesticide residues), etc.”.(624)

501. The Appellate Body in US/Canada — Continued Suspension noted
that the relevant “international standards, guidelines or
recommendations” that are referred to in Articles 3.1 and
3.2 are
those set by the international organizations listed in Annex A,
paragraph 3 of the SPS Agreement, which includes Codex as the relevant
standard-setting organization for matters of food safety.(625)

502. The Appellate Body in Australia — Apples noted that
Article 5.1 requires Members performing risk assessments to take “into
account risk assessment techniques developed by the relevant
international organizations”. In this regard, the Appellate Body
acknowledged that according to Annex A(3)(c), the international
standards, guidelines and recommendations relevant for plant health are
those developed under the auspices of the IPPC in cooperation with the
regional organizations working within the framework of the IPPC.(626)

3. Annex A(4): “risk assessment”

(a) General

503. The Panel in Australia — Salmon (Article 21.5 — Canada) held
that a requirement that Members assess risk “according to the
[sanitary] measures which might be applied” could not be read into the
definition of “risk assessment”; rather, the requirement of a
linkage between the risk assessment on the one hand, and the final
measure and the necessity to use such measure on the other, were to be
derived from other provisions of the SPS Agreement:

“Canada’s claim … raises the question of whether the definition
of risk assessment as such, requiring Members to assess risk ‘according
to the [sanitary] measures which might be applied’, can be construed
so as to include the obligation to make the link between the assessment,
the measures finally selected and the necessity to use these measures in
order to achieve the [appropriate level of sanitary or phytosanitary
protection]. We find it difficult to read such a requirement into
paragraph 4 of Annex A.

In our view, the rights and obligations in respect of these linkages
are set out not in the definition of risk assessment itself — which
logically precedes the selection of measures — but, inter alia, in the
obligation to base sanitary measures on a risk assessment in Article 5.1
and to ensure that sanitary measures are not more trade restrictive than
required to achieve the [appropriate level of sanitary or phytosanitary
protection] in the sense of Article
5.6. To examine these questions of
relationship between the risk assessment, the measures selected and the
[appropriate level of sanitary or phytosanitary protection] under the
definition of risk assessment — as Canada … seem[s] to do — would,
in our view, run the risk of adding to or diminishing the more specific
rights and obligations of Members set out in other SPS obligations,
contrary to Article 19.2 of the DSU.

… In any event, we prefer to address this question of relationship
between the measures selected and the risk assessment under the
obligation to base measures on a risk assessment pursuant to Article 5.1
rather than under the very definition of risk assessment referred to in
the same provision.”(627)

(b) First part of Annex A(4): First definition of risk assessment

(i) Types of risks

504. The Appellate Body in Australia — Salmon found that the
first type of risk assessment in Annex A(4) is substantially different
from the second type of risk assessment contained in the same paragraph.
While the second requires only the evaluation of the potential for
adverse effects on human or animal health, the first type of risk
assessment demands an evaluation of the likelihood of entry,
establishment or spread of a disease, and of the associated potential
biological and economic consequences.(628)

505. The Panel in Australia — Salmon, in statements affirmed
by the Appellate Body(629), discussed the types of risks set that must be
examined in the first definition of “risk assessment” in Annex A(4):

“Examining the definition of risk assessment applicable to the
measure at issue, i.e., the ‘evaluation of the likelihood of entry,
establishment or spread of a pest or disease within the territory of an
importing Member according to the sanitary or phytosanitary measures
which might be applied, and of the associated potential biological and
economic consequences’, we consider, first of all, that the risk thus
to be assessed includes (1) the risk of ‘entry, establishment or
spread’ of a disease and (2) the risk of the ‘associated potential
biological and economic consequences’. When we refer hereafter to the
risk related to a disease, this risk thus includes the risk of entry,
establishment or spread of that disease as well as the biological and
economic consequences associated therewith.

…

In this dispute, the measure at issue is intended to protect animal
health as a sanitary measure defined in paragraph 1(a) of Annex A and is
to be based on a risk assessment in the sense of the first definition in
paragraph 4 of Annex A. According to this first definition in paragraph
4, such risk assessment has to take into account risks arising not only
from the ‘entry, establishment or spread of a pest or disease’, but
also from the ‘associated biological and economic consequences’.”(630)

507. The Panel in Australia — Salmon stated that where
several diseases were involved in the risk assessment, such risk
assessment at least had to identify the risk on a disease-specific
basis. The Panel also referred to the Appellate Body’s findings in EC
— Hormones to this effect:

“[G]iven the definition of risk assessment applicable in this case
(the ‘evaluation of the likelihood of entry, establishment or spread
of a … disease’, in the singular form), a risk assessment for the
measure at issue in this dispute at least has to identify risk on a
disease specific basis, i.e., it has to identify the risk for any given
disease of concern separately, not simply address the overall risk
related to the combination of all diseases of concern. … The experts
advising the Panel on this issue confirmed this. In the EC —
Hormones case as well, both the Panels and the Appellate Body
required some degree of specificity for a risk assessment — or a study
or report allegedly part thereof — to be in accordance with the
requirements imposed in Article 5.1.”(631)

(iv) “likelihood”

508. In Australia — Salmon, the Appellate Body recalled its
finding in EC — Hormones where it had distinguished between the
terms “potential” and “probability”. Finding that the term “likelihood”
was synonymous with the term “probability”, the Appellate Body
disagreed with the Panel’s finding that a risk assessment required
only some evaluation of likelihood or probability:

“We note that the first definition in paragraph 4 of Annex A speaks
about the evaluation of ‘likelihood.’ In our report in European
Communities — Hormones, we referred to the dictionary meaning of
‘probability’ as ‘degrees of likelihood’ and ‘a thing that is
judged likely to be true’, for the purpose of distinguishing the terms
‘potential’ and ‘probability’. For the present purpose, we refer
in the same manner to the ordinary meaning of ‘likelihood’, and we
consider that it has the same meaning as ‘probability’. On this
basis, as well as on the basis of the definition of ‘risk’ and ‘risk
assessment’ developed by the Office international des épizooties (‘OIE’)
and the OIE Guidelines for Risk Assessment, we maintain that for a risk
assessment to fall within the meaning of Article 5.1 and the first
definition in paragraph 4 of Annex A, it is not sufficient that a risk
assessment conclude that there is a possibility of entry, establishment
or spread of diseases and associated biological and economic
consequences. A proper risk assessment of this type must evaluate the
‘likelihood’, i.e., the ‘probability’, of entry, establishment
or spread of diseases and associated biological and economic
consequences as well as the ‘likelihood’, i.e., ‘probability’,
of entry, establishment or spread of diseases according to the SPS
measures which might be applied.

We note that, although the Panel stated that the definition of a risk
assessment for this type of measure requires an ‘evaluation of the
likelihood’, for the purpose of satisfying the second and third
requirements, it subsequently was hesitant in applying these
requirements, by stating or suggesting in paragraphs 8.80, 8.83, 8.89
and 8.91, that some evaluation of the likelihood or probability would
suffice. We consider this hesitation unfortunate. We do not agree with
the Panel that a risk assessment of this type needs only some evaluation
of the likelihood or probability. The definition of this type of risk
assessment in paragraph 4 of Annex A refers to ‘the evaluation of the
likelihood’ and not to some evaluation of the likelihood. We agree,
however, with the Panel’s statements in paragraph 8.80 that the SPS
Agreement does not require that the evaluation of the likelihood needs
to be done quantitatively. The likelihood may be expressed either
quantitatively or qualitatively. Furthermore, we recall, as does the
Panel, that we stated in European Communities — Hormones that
there is no requirement for a risk assessment to establish a certain
magnitude or threshold level of degree of risk.”(632)

509. The Panel in Japan — Apples recalled the Appellate Body’s
finding in EC — Hormones that the evaluation of likelihood
involves more than a mere identification of “possibilities” and
requires an assessment of probability of entry, which implies a higher
degree or a “threshold of potentiality or possibility”. The Panel
added that such probability need not be expressed in quantitative terms,
but may be expressed in qualitative terms.(633)

510. In EC — Approval and Marketing of Biotech Products, the
Panel considered that the failure to evaluate likelihood in a study
meant that the study did not meet the definition of a risk assessment:

“Given the lack of evaluation of likelihood in the Hoppichler
study, we consider that the study does not meet the definition of a risk
assessment as provided in Annex A(4), and therefore does not constitute
a risk assessment within the meaning of Annex A(4) and
Article 5.1.”(634)

(v) “according to the [SPS] measures which might be applied”

511. Regarding the requirement to evaluate the likelihood of entry,
establishment or spread of the diseases according to the SPS measures
which might be applied, the Appellate Body in Japan — Apples agreed
with the Panel that the phrase “according to the [SPS] measures which
might be applied” implies that a risk assessment should not be limited
to an examination of the measure already in place:

“[A]ccording to the Panel, the terms in the definition of ‘risk
assessment’ set out in paragraph 4 of Annex A to the SPS Agreement —
more specifically, the phrase ‘according to the sanitary or
phytosanitary measures which might be applied’ — suggest that ‘consideration
should be given not just to those specific measures which are currently
in application, but at least to a potential range of relevant measures.’
…

The definition of ‘risk assessment’ in the SPS Agreement requires
that the evaluation of the entry, establishment or spread of a disease
be conducted ‘according to the sanitary or phytosanitary measure which
might be applied.’ We agree with the Panel that this phrase ‘refers
to the measures which might be applied, not merely to the measures which
are being applied.’ The phrase ‘which might be applied’ is used in
the conditional tense. In this sense, ‘might’ means: ‘were or
would be or have been able to, were or would be or have been allowed to,
were or would perhaps’. We understand this phrase to imply that a risk
assessment should not be limited to an examination of the measure
already in place or favoured by the importing Member. In other words,
the evaluation contemplated in paragraph 4 of Annex A to the SPS
Agreement should not be distorted by preconditioned views on the nature
and the content of the measure to be taken; nor should it develop into
an exercise tailored to and carried out for the purpose of justifying
decisions ex post facto.”(635)

512. In US/Canada — Continued Suspension, the Appellate Body
stated that upon completion of a risk assessment, Members are not
required to adopt an SPS measure. The decision to adopt an SPS measure
or not is dependent on the outcome of the risk assessment. The Appellate
Body considered that Members may not deem it appropriate to adopt SPS
measure if the result of the risk assessment does not compel to adopt
such measure:

“Whilst WTO Members have the right to take SPS measures, they are
not required to do so. The risk assessment may conclude that there is no
ascertainable risk, in which case no SPS measure can be taken.
Alternatively, a WTO Member may conclude that an SPS measure is not
necessary in the light of the risks determined in the risk assessment
and the acceptable level of protection determined by that WTO Member.”(636)

513. With respect to the Appellate Body’s position on the Members’
discretion to adopt or not to adopt an SPS measure following the
completion of a risk assessment, see also paragraph 169 above.

(vi) “Evaluation of likelihood of entry, establishment or
spread of a pest or disease”

Risk assessment to be specific to the product at issue

514. In Japan — Apples, the Appellate Body upheld the Panel’s
finding that Japan’s risk assessment did not evaluate the likelihood
of entry, establishment or spread of fire blight because its risk
assessment was not specific enough about the product at issue — apple
fruit:

“[U]nder the SPS Agreement, the obligation to conduct an assessment
of ‘risk’ is not satisfied merely by a general discussion of the
disease sought to be avoided by the imposition of a phytosanitary
measure.(637) The Appellate Body found the risk assessment at issue in EC
— Hormones not to be ‘sufficiently specific’ even though the
scientific articles cited by the importing Member had evaluated the ‘carcinogenic
potential of entire categories of hormones, or of the hormones at issue
in general.’(638) In order to constitute a ‘risk assessment’ as
defined in the SPS Agreement, the Appellate Body concluded, the risk
assessment should have reviewed the carcinogenic potential, not of the
relevant hormones in general, but of ‘residues of those hormones found
in meat derived from cattle to which the hormones had been administered
for growth promotion purposes’. Therefore, when discussing the risk to
be specified in the risk assessment in EC — Hormones, the
Appellate Body referred in general to the harm concerned (cancer or
genetic damage) as well as to the precise agent that may possibly cause
the harm (that is, the specific hormones when used in a specific manner
and for specific purposes).

In this case, the Panel found that the conclusion of the 1999 PRA
with respect to fire blight was ‘based on an overall assessment of
possible modes of contamination, where apple fruit is only one of the
possible hosts/vectors considered.’ … Given that the measure at
issue relates to the risk of transmission of fire blight through apple
fruit, in an evaluation of whether the risk assessment is ‘sufficiently
specific to the case at hand’, the nature of the risk addressed by the
measure at issue is a factor to be taken into account. In light of these
considerations, we are of the view that the Panel properly determined
that the 1999 PRA ‘evaluat[ion of] the risks associated with all
possible hosts taken together’ was not sufficiently specific to
qualify as a ‘risk assessment’ under the SPS Agreement for the
evaluation of the likelihood of entry, establishment or spread of fire
blight in Japan through apple fruit.”(639)

(c) Second part of Annex A(4): Second definition of risk assessment

(i) Distinction from the first definition of risk
assessment

515. With respect to the second definition of “risk assessment”
contained in Annex A(4), the Appellate Body in Australia — Salmon noted
that while the first definition speaks of “likelihood”, the second
definition speaks of “potential” for adverse effects:

“We note that the first type of risk assessment in
paragraph 4 of Annex A is substantially different from the second type of risk
assessment contained in the same paragraph. While the second requires
only the evaluation of the potential for adverse effects on human or
animal health, the first type of risk assessment demands an evaluation
of the likelihood of entry, establishment or spread of a disease, and of
the associated potential biological and economic consequences. In view
of the very different language used in paragraph 4 of Annex A for the
two types of risk assessment, we do not believe that it is correct to
diminish the substantial differences between these two types of risk
assessments, as the European Communities seems to suggest when it argues
that ‘the object, purpose and context of the SPS Agreement indicate
that no greater level of probability can have been intended for the
first type of risk assessment than for the second type, [as b]oth types
can apply both to human life or health and to animal or plant life or
health’. (Third participant’s submission of the European
Communities, para. 7).”(640)

516. With respect to the second definition of risk assessment, the
Panel in EC — Hormones described risk assessment as a two-step
process that “should (i) identify the adverse effects on human health
(if any) arising from the presence of the hormones at issue when used as
growth promoters inmeat …, and (ii) if any such adverse effects exist,
evaluate the potential or probability of occurrence of such effects”.
On appeal, the Appellate Body did not find the Panel’s two-step
process to be substantially wrong, save for the Panel’s use of “probability”
as an alternative term for “potential”. The Appellate Body found
that the ordinary meaning of “potential” relates to “possibility”
and is different from the ordinary meaning of “probability”. “Probability”
implies a higher degree or a threshold of potentiality or possibility.
It thus appears that here the Panel introduces a quantitative dimension
to the notion of risk.(641)

(ii) No requirement to quantify the level of risk

517. With respect to the relevance of the second definition of “risk
assessment” within Annex A, the Appellate Body in US/Canada —
Continued Suspension reasoned that the Panel’s reference to “potential
occurrence” of adverse effects when asking questions to the experts,
does not amount to the requirement of a quantitative method of risk
assessment. On this basis, the Appellate Body also contemplated the
relevance of potentiality for the purpose of a “risk assessment”
under the second sentence of Paragraph A:

“Although the definition of a risk assessment does not require WTO
Members to establish a minimum magnitude of risk, it is nevertheless
difficult to understand the concept of risk as being devoid of any
indication of potentiality. A risk assessment is intended to identify
adverse effects and evaluate the possibility that such adverse effects
might arise. This distinguishes an ascertainable risk from theoretical
uncertainty. However, the assessment of risk need not be expressed in
numerical terms or as a minimum quantification of the level of risk. We
are also mindful that the risk assessment at issue in this case concerns
the potential for adverse effects under the second sentence of
paragraph 4 of Annex A and not an evaluation of likelihood under the
first sentence of paragraph 4.(642)

518. On the basis of its ruling that a risk assessment need not be
expressed in numerical terms, the Appellate Body in US/Canada —
Continued Suspension held that the Panel’s reference to magnitude
when appraising the European Communities’ risk assessment did not
amount to a requirement that the European Communities quantify the level
of risk:

“[A] ‘risk assessment’ involves an indication of potentiality,
even though this need not be expressed in numerical terms or as a
minimum quantification of the level of risk. In this sense, the Panel’s
reference to ‘magnitude’ is in our view not sufficient to establish
that the Panel incorrectly interpreted Article 5.1 and
paragraph 4 of
Annex A as requiring a quantitative risk assessment.

… For these reasons, we consider that the Panel’s reference to
‘potential occurrence’ of adverse health effects could be read
consistently with the definition of a risk assessment in paragraph 4 of
Annex A of the SPS Agreement, as interpreted by the Appellate
Body.”(644)

(iii) Methodology of risk assessment

Two-step analysis

519. In EC — Hormones, with respect to the methodology for a
risk assessment under the second definition of paragraph 4 of Annex A of
the SPS Agreement, the Panels stated that “in this dispute, a risk
assessment carried out in accordance with the SPS Agreement should (i)
identify the adverse effects on human health (if any) arising from the
presence of the hormones at issue when used as growth promoters in meat
or meat products, and (ii) if any such adverse effects exist, evaluate
the potential or probability of occurrence of these effects”.(645) The
Appellate Body did not disagree with the Panels’ two-step analytical
approach but cautioned against equating the terms “potential” and
“probability”:

“Although the utility of a two-step analysis may be debated, it
does not appear to us to be substantially wrong. What needs to be
pointed out at this stage is that the Panel’s use of ‘probability’
as an alternative term for ‘potential’ creates a significant
concern. The ordinary meaning of ‘potential’ relates to ‘possibility’
and is different from the ordinary meaning of ‘probability’. ‘Probability’
implies a higher degree or a threshold of potentiality or possibility.
It thus appears that here the Panel introduces a quantitative dimension
to the notion of risk.”(646)

Specific attribution of risk

520. The Appellate Body in Japan — Apples agreed with Japan
that, whether to analyse the risk on the basis of the particular pest or
disease or on the basis of a particular commodity, is a “matter of
methodology” that lies within the discretion of the importing Member.
However, the Appellate Body found that the Panel did not suggest, as
Japan had argued, that there was an obligation to follow any particular
methodology in conducting a risk assessment. The Appellate Body
emphasized that Members are free to consider, in their risk analysis,
multiple agents in relation to one disease, provided that the risk
assessment attributes a likelihood of entry, establishment or spread of
the disease to each agent specifically:

“Japan contends that the ‘methodology’ of the risk assessment
is not directly addressed by the SPS Agreement. In particular, Japan
suggests that, whether to analyze the risk on the basis of the
particular pest or disease, or on the basis of a particular commodity,
is a ‘matter of methodology’ not directly addressed by the SPS
Agreement. We agree. Contrary to Japan’s submission, however, the
Panel’s reading of EC — Hormones does not suggest that there
is an obligation to follow any particular methodology for conducting a
risk assessment. In other words, even though, in a given context, a risk
assessment must consider a specific agent or pathway through which
contamination might occur, Members are not precluded from organizing
their risk assessments along the lines of the disease or pest at issue,
or of the commodity to be imported. Thus, Members are free to consider
in their risk analysis multiple agents in relation to one disease,
provided that the risk assessment attribute a likelihood of entry,
establishment or spread of the disease to each agent specifically.
Members are also free to follow the other ‘methodology’ identified
by Japan and focus on a particular commodity, subject to the same
proviso.”(647)

(d) Distinction between “risk assessment” and “risk management”

521. In EC — Hormones, the Panel sought to distinguish
between the concepts of risk assessment and risk management, in
determining what could properly be described as a risk assessment within
the meaning of Article 5 and Annex A of the SPS
Agreement. The Appellate
Body rejected this distinction noting that the term “risk management”
does not appear in the SPS Agreement:

“The second preliminary consideration relates to the Panel’s
effort to distinguish between ‘risk assessment’ and ‘risk
management’. The Panel observed that an assessment of risk is, at
least with respect to risks to human life and health, a ‘scientific’
examination of data and factual studies; it is not, in the view of the
Panel, a ‘policy’ exercise involving social value judgments made by
political bodies. The Panel describes the latter as ‘non-scientific’
and as pertaining to ‘risk management’ rather than to ‘risk
assessment’. We must stress, in this connection, that Article 5 and
Annex A of the SPS Agreement speak of ‘risk assessment’ only
and that the term ‘risk management’ is not to be found either in
Article 5 or in any other provision of the SPS Agreement. Thus,
the Panel’s distinction, which it apparently employs to achieve or
support what appears to be a restrictive notion of risk assessment, has
no textual basis. The fundamental rule of treaty interpretation requires
a treaty interpreter to read and interpret the words actually used by
the agreement under examination, and not words which the interpreter may
feel should have been used.”(648)

522. In US/Canada — Continued Suspension, the Appellate
Body, recalling its ruling in EC — Hormones, reiterated that
the term “risk management” is not found in the SPS Agreement. The
Appellate Body however acknowledged that Codex draws a distinction
between “risk management” and “risk assessment”:

“We understand that Codex draws a distinction between ‘risk
assessment’ and ‘risk management’. It defines ‘risk management’
as ‘the process, distinct from risk assessment, of weighing
policy alternatives … considering risk assessment and other factors
relevant for the health protection of consumers and for the promotion of
fair trade practices, and, if needed, selecting appropriate prevention
and control options’. In EC — Hormones, the Appellate Body
noted that the SPS Agreement does not refer to the concept of ‘risk
management’ and it rejected the Panel’s restrictive interpretation
of a ‘risk assessment’ based on that distinction.(649)”(650)

523. The Appellate Body in US/Canada — Continued Suspension considered
the Panel’s distinction between risk assessment and risk management to
be rigid, equating this distinction to the Panel’s exclusion of risks
arising from misuse or abuse in the administration of hormones. The
Appellate Body ruled that these risks are of utmost relevance:

“We find it difficult to reconcile the Panel’s understanding of EC
— Hormones with what the Appellate Body held in that Report. As we
noted above, in that case, the Appellate Body rejected the rigid
distinction drawn by the Panel between ‘risk assessment’ and ‘risk
management’ …

Subsequently in the same Report, the Appellate Body reiterated its
view that ‘the concept of “risk management” is not mentioned in
any provision of the SPS Agreement and, as such, cannot be used
to sustain a more restrictive interpretation of “risk
assessment” than is justified by the actual terms of Article
5.2,
Article 8 and Annex C of the SPS Agreement’.

Therefore, in our view, the Panel’s interpretation of ‘risk
assessment’ resulted in the same ‘restrictive notion of risk
assessment’ that the Appellate Body found to be erroneous in EC —
Hormones. The Panel sought in this case to rewrite the Appellate
Body Report in EC — Hormones and to re-establish the rigid
distinction between ‘risk assessment’ and ‘risk management’ that
the Appellate Body had rejected in that case.”(651)

524. Finally, the Appellate Body in US/Canada — Continued
Suspension ruled that the Panel’s dismissal of risks arising from
abuse or misuse in the administration of hormones amounted to an
incorrect application of the provisions of Article 5.1 and
Annex A of
the SPS Agreement:

“The European Communities made it clear that the risks of abuse or
misuse were a relevant consideration in its risk assessment. This is
confirmed in the 1999 and 2002 Opinions. At least two of the scientific
experts consulted by the Panel recognized that the misuse or abuse in
the administration of the hormones could give rise to adverse effects.
The Panel had a duty to engage with this evidence and with the
discussion of this evidence in the SCVPH Opinions. By summarily
dismissing the evidence on the misuse or abuse in the administration of
the hormones and the consequent conclusions in the SCVPH Opinions in the
manner that it did, the Panel incorrectly applied Article 5.1 and the
definition of ‘risk assessment’ in Annex A of the SPS Agreement,
as interpreted by the Appellate Body.”(652)

525. For additional information on the distinction between “risk
assessment” and “risk management” see paragraph 131
above.

526. With respect to the analysis addressing the requirement for
risks arising from abuse of controlled substances, see Article 5.2
above.

(e) Relationship with other provisions of the SPS Agreement

527. The Panel in US — Poultry (China) considered that in
determining whether a measure is based on a risk assessment within the
meaning of Article 5.1 of the SPS
Agreement, one needs to first
determine whether a risk assessment was conducted at all. The Panel
stated that “[i]n order to do so, it is helpful to start by looking
into what a risk assessment is, in light of the definition in Annex A(4)”.(653)

528. The Panel in US — Poultry (China) discussed the
relationship between the SPS measures as identified in Annex A(1)(a)–(d)
and the two types of risk assessment identified in Annex
A(4). The Panel
stated:

“[I]t would seem that SPS measures under Annex A(1)(a) and
(c)
would require risk assessments conducted pursuant to the definition
under the first sentence of Annex A(4) while those which satisfy the
definition of an SPS measure under Annex A(1)(b) would require that the
risk assessment be conducted pursuant to the second sentence of Annex
A(4).”(654)

4. Annex A(5): “appropriate level of protection”

(a) General

(i) Right to determine the appropriate level of protection

529. The Appellate Body in Australia — Salmon held that the
determination of the appropriate level of protection, a notion defined
in Annex A(5), is a prerogative of the Member concerned and not of a
panel or the Appellate Body.(655)

(ii) Relationship between the “risk assessment” and
the “appropriate level of protection”

530. In US/Canada — Continued Suspension, the Appellate Body
reasoned that the choice of an appropriate level of protection has
significant bearing on the scope of the risk assessment to be performed
by a Member. Reflecting on this statement, the Appellate Body considered
that the same remains true in case a Member chooses a protection measure
that is more restrictive than an existing international standard.
However, the Appellate Body cautioned that the chosen level of
protection should not influence the outcome of the risk assessment. The
risk assessment must remain an objective and rigorous process:

“The risk assessment cannot be entirely isolated from the
appropriate level of protection. There may be circumstances in which the
appropriate level of protection chosen by a Member affects the scope or
method of the risk assessment. This may be the case where a WTO Member
decides not to adopt an SPS measure based on an international standard
because it seeks to achieve a higher level of protection. In such a
situation, the fact that the WTO Member has chosen to set a higher level
of protection may require it to perform certain research as part of its
risk assessment that is different from the parameters considered and the
research carried out in the risk assessment underlying the international
standard. However, the chosen level of protection must not affect the
rigour or objective nature of the risk assessment, which must remain, in
its essence, a process in which possible adverse effects are evaluated
using scientific methods.(656) Likewise, whatever the level of protection
a Member chooses does not pre-determine the results of the risk
assessment. Otherwise, the purpose of performing the risk assessment
would be defeated.”(657)

531. See also
paragraphs 178–180 above on the relationships between
the risk assessment and the appropriate level of protection.

(iii) Relationship between the “SPS measure” and
the “appropriate level of protection”

532. In Australia — Salmon, the Appellate Body stressed that
the “appropriate level of protection” established by a Member and
the “SPS measure” have to be clearly distinguished. The first is an
objective, the second is an instrument chosen to attain or implement
that objective:(658)

“It can be deduced from the provisions of the SPS Agreement that
the determination by a Member of the ‘appropriate level of protection’
logically precedes the establishment or decision on maintenance of an
‘SPS measure’.”(659)

533. The Panel in Australia — Apples noted that SPS measures
are indicative — although not necessarily conclusive — of a Member’s
appropriate level of protection as defined by Annex A(5) of the SPS
Agreement.(660)

536. For a detailed discussion of the application of the term “appropriate
level of protection” in Article 5.5, refer to the Section on
Article
5.5 above.

(iv) Article 5.6

537. A Member’s appropriate level of protection is to be taken into
account when a Panel or the Appellate Body is making a determination on
a violation of Article 5.6. See the Section on
Article 5.6 above.

(v) Article 5.7

538. A Member’s chosen level of protection is irrelevant when
applying the requirement to seek to obtain more information and review
the provisional SPS measures within a reasonable period of time. See
paragraph 320 above.

1. Members shall ensure that all sanitary and phytosanitary
regulations(5) which have been adopted are published promptly in such a
manner as to enable interested Members to become acquainted with them.

(footnote original)
5 Sanitary and phytosanitary measures such
as laws, decrees or ordinances which are applicable generally.

2. Except in urgent circumstances, Members shall allow a reasonable
interval between the publication of a sanitary or phytosanitary
regulation and its entry into force in order to allow time for producers
in exporting Members, and particularly in developing country Members, to
adapt their products and methods of production to the requirements of
the importing Member.

Enquiry points

3. Each Member shall ensure that one enquiry point exists which is
responsible for the provision of answers to all reasonable questions
from interested Members as well as for the provision of relevant
documents regarding:

(a) any sanitary or phytosanitary regulations adopted or proposed
within its territory;

(b) any control and inspection procedures, production and quarantine
treatment, pesticide tolerance and food additive approval procedures,
which are operated within its territory;

(c) risk assessment procedures, factors taken into consideration, as
well as the determination of the appropriate level of sanitary or
phytosanitary protection;

(d) the membership and participation of the Member, or of relevant
bodies within its territory, in international and regional sanitary and
phytosanitary organizations and systems, as well as in bilateral and
multilateral agreements and arrangements within the scope of this
Agreement, and the texts of such agreements and arrangements.

4. Members shall ensure that where copies of documents are requested
by interested Members, they are supplied at the same price (if any),
apart from the cost of delivery, as to the nationals(6) of the
Member concerned.

(footnote original)
6 When “nationals” are referred
to in this Agreement, the term shall be deemed, in the case of a
separate customs territory Member of the WTO, to mean persons, natural
or legal, who are domiciled or who have a real and effective industrial
or commercial establishment in that customs territory.

Notification
procedures

5. Whenever an international standard, guideline or recommendation
does not exist or the content of a proposed sanitary or phytosanitary
regulation is not substantially the same as the content of an
international standard, guideline or recommendation, and if the
regulation may have a significant effect on trade of other Members,
Members shall:

(a) publish a notice at an early stage in such a manner as to enable
interested Members to become acquainted with the proposal to introduce a
particular regulation;

(b) notify other Members, through the Secretariat, of the products to
be covered by the regulation together with a brief indication of the
objective and rationale of the proposed regulation. Such notifications
shall take place at an early stage, when amendments can still be
introduced and comments taken into account;

(c) provide upon request to other Members copies of the proposed
regulation and, whenever possible, identify the parts which in substance
deviate from international standards, guidelines or recommendations;

(d) without discrimination, allow reasonable time for other Members
to make comments in writing, discuss these comments upon request, and
take the comments and the results of the discussions into account.

6. However, where urgent problems of health protection arise or
threaten to arise for a Member, that Member may omit such of the steps
enumerated in paragraph 5 of this Annex as it finds necessary, provided
that the Member:

(a) immediately notifies other Members, through the Secretariat, of
the particular regulation and the products covered, with a brief
indication of the objective and the rationale of the regulation,
including the nature of the urgent problem(s);

(b) provides, upon request, copies of the regulation to other
Members;

(c) allows other Members to make comments in writing, discusses these
comments upon request, and takes the comments and the results of the
discussions into account.

7. Notifications to the Secretariat shall be in English, French or
Spanish.

8. Developed country Members shall, if requested by other Members,
provide copies of the documents or, in case of voluminous documents,
summaries of the documents covered by a specific notification in
English, French or Spanish.

9. The Secretariat shall promptly circulate copies of the
notification to all Members and interested international organizations
and draw the attention of developing country Members to any
notifications relating to products of particular interest to them.

10. Members shall designate a single central government authority as
responsible for the implementation, on the national level, of the
provisions concerning notification procedures according to paragraphs
5, 6, 7 and 8 of this
Annex.

General reservations

11. Nothing in this Agreement shall be construed as requiring:

(a) the provision of particulars or copies of drafts or the
publication of texts other than in the language of the Member except as
stated in paragraph 8 of this Annex; or

(b) Members to disclose confidential information which would impede
enforcement of sanitary or phytosanitary legislation or which would
prejudice the legitimate commercial interests of particular enterprises.

B. Interpretation and Application of Annex B

1. Annex B(1): publication requirements

(a) Footnote to Annex B(1)

539. In Japan — Agricultural Products II, with reference to
the footnote to Annex B(1), the Appellate Body held that the list of
instruments contained therein was not exhaustive in nature and referred
to the object and purpose of Annex B(1):

“We consider that the list of instruments contained in the
footnote
to paragraph 1 of Annex B is, as is indicated by the words ‘such as’,
not exhaustive in nature. The scope of application of the publication
requirement is not limited to ‘laws, decrees or ordinances’, but
also includes, in our opinion, other instruments which are applicable
generally and are similar in character to the instruments explicitly
referred to in the illustrative list of the footnote
to paragraph 1 of Annex B.

The object and purpose of paragraph 1 of Annex B is ‘to enable
interested Members to become acquainted with’ the sanitary and
phytosanitary regulations adopted or maintained by other Members and
thus to enhance transparency regarding these measures. In our opinion,
the scope of application of the publication requirement of paragraph 1
of Annex B should be interpreted in the light of the object and purpose
of this provision.

We note that it is undisputed that the varietal testing requirement
is applicable generally. Furthermore, we consider in the light of the
actual impact of the varietal testing requirement on exporting
countries, as discussed by the Panel in paragraphs 8.112 and 8.113 of
the Panel Report, that this instrument is of a character similar to
laws, decrees and ordinances, the instruments explicitly referred to in
the footnote to paragraph 1 of Annex B.”(661)

(b) Scope of application of publishing requirements

540. In Japan — Agricultural Products II, the Panel set the
conditions of application of the publishing requirements under Annex
B:

“[I]n our view, for a measure to be subject to the publication
requirement in Annex B, three conditions apply: (1) the measure ‘[has]
been adopted’; (2) the measure is a ‘phytosanitary regulation’,
namely a phytosanitary measure such as a law, decree or ordinance, which
is (3) ‘applicable generally’.”(662)

541. The Panel, in Japan — Agricultural Products, in the
context of verifying whether the requirement at issue could be
considered as an SPS measure albeit its non-mandatory nature, considered
that such a requirement could still be an SPS measure in light of the
conditions under Annex A of the SPS Agreement:

“Even though the varietal testing requirement is not mandatory —
in that exporting countries can demonstrate quarantine efficiency by
other means — in our view, it does constitute a ‘phytosanitary
regulation’ subject to the publication requirement in Annex B. The
footnote to paragraph 1 of Annex B refers in general terms to ‘phytosanitary
measures such as laws, decrees or ordinances’. Nowhere does the
wording of this paragraph require such measures to be mandatory or
legally enforceable. Moreover, Paragraph 1 of Annex A to the SPS
Agreement makes clear that ‘phytosanitary measures include all
relevant laws, decrees, regulations, requirements and procedures’. It
does not, in turn, require that such measures be mandatory or legally
enforceable. The interpretation that measures need not be mandatory to
be subject to WTO disciplines is confirmed by the context of the
relevant SPS provisions, a context which includes provisions of other
WTO agreements and the way these provisions define ‘measure’, ‘requirement’
or ‘restriction’, as interpreted in GATT and WTO jurisprudence. This
context indicates that a non-mandatory government measure is also
subject to WTO provisions in the event compliance with this measure is
necessary to obtain an advantage from the government or, in other words,
if sufficient incentives or disincentives exist for that measure to be
abided by.”(663)

542. In EC — Approval and Marketing of Biotech Products, the
Panel examined whether the publishing requirements in Annex B(1) applied
not only to SPS measures, but to a generally applicable measure
concerning the administration or operation of an SPS measure. The Panel
concluded that Annex B(1) applies only to SPS regulations, which are a
sub-category of SPS measures. Therefore, the Panel determined that the
publishing requirements did not apply to actions that were not SPS
measures. On this basis and given its ruling that the EC general
moratorium on approving applications was not an SPS measure, the Panel
found that the provisions of Annex B(1) did not apply to the moratorium:

“Annex B(1) applies to ‘sanitary and phytosanitary regulations’
(hereafter ‘SPS regulations’) which have been ‘adopted’. An
explanatory footnote to Annex B(1) indicates that the term ‘SPS
regulations’ should be understood as meaning ‘[s]anitary and
phytosanitary measures such as laws, decrees or ordinances which are
applicable generally’. That SPS regulations are ‘SPS measures’ is
confirmed by Article 7 which states that Members must notify changes in
their ‘SPS measures’ and provide information on their ‘SPS
measures’ ‘in accordance with the provisions of Annex B’. It can
be inferred from this that the ‘SPS regulations’ at issue in Annex
B(1) are a sub-category of ‘SPS measures’. Regarding the meaning of
the term ‘SPS measures’, we recall Article 1 of the SPS
Agreement.

…

Annex B(1) read in conjunction with the accompanying footnote
provides that a generally applicable ‘SPS measure’ which has been
adopted must be published promptly. We recall that according to Annex
A(1) the term ‘SPS measures’ includes ‘requirements and procedures’.
It can be deduced from this that a generally applicable measure imposing
a substantive SPS requirement or establishing an SPS procedure is to be
published, since such a measure would itself be an ‘SPS measure’. In
contrast, neither Annex B(1) nor its accompanying footnote suggests that
a generally applicable measure concerning the administration, or
operation, of an SPS measure — such as a measure providing for a
particular operation of an SPS approval procedure — is, also, to be
published.”(664)

(c) Publication versus information

543. In Japan — Agricultural Products II, the Panel
established that publication requirements are not exhausted by the mere
information of the relevant entities and that, once adopted, an SPS
measure, provided that it meets all three conditions for a measure to be
subject to the publication requirement in paragraph 1 of Annex
B, needs
to be “published promptly in such a manner as to enable interested
Members to become acquainted with them”:

“Japan acknowledges that it has not published the varietal testing
requirement. The fact that Japan distributed the guidelines to foreign
plant quarantine authorities does not mitigate the lack of publication.
In our view, distribution to a limited number of addressees and MAFF’s
general availability to answer any queries, does not equal prompt
publication which enables interested Members to become acquainted with
the varietal testing requirement. The publication by MAFF of the
protocols relating to approved products does not ensure publication of
the varietal testing requirement itself. It only informs Members of
products which have met this requirement. Moreover, we do not consider
that the highly technical nature of the varietal testing requirement can
excuse Japan from publishing it.”(665)

2. Annex B(2): “reasonable interval”

544. At the Doha Ministerial conference, Members decided that the “reasonable
interval” in respect of paragraph 2 should normally be understood as a
period of not less than six months:

“Subject to the conditions specified in paragraph 2 of Annex B to
the Agreement on the Application of Sanitary and Phytosanitary Measures,
the phrase ‘reasonable interval shall be understood to mean normally a
period of not less than 6 months. It is understood that timeframes for
specific measures have to be considered in the context of the particular
circumstances of the measure and actions necessary to implement it. The
entry into force of measures which contribute to the liberalization of
trade should not be unnecessarily delayed.”(666)

3. Annex B(3): enquiry points

(a) General

545. The Panel in Australia — Salmon found that there was no
obligation under the SPS Agreement for a Member to positively identify
its chosen appropriate level of protection. In the context of this
finding, the Panel held that paragraph 3 of Annex B did not impose a “substantive
obligation on Members to identify or quantify their appropriate level of
protection”, but rather merely a “mainly procedural obligation to
provide ‘answers to all reasonable questions from all interested
Members’”.(667) The Appellate Body reversed the Panel’s finding and
held that there was such an obligation — albeit implicit — in Annex
B(3).(668)

(b) Paragraph 3(d)

546. In relation to the reinforcement of the transparency obligation
of the agreements on equivalence between Members, see paragraph 363
above.

4. Annex B(5): conditions for notification requirements

547. The Panel in Japan — Apples, in determining whether any
changes in Members’ SPS measures constitute changes that must be
notified under Article 7, found that the most important factor to be
taken into consideration is “whether the change affects the conditions
of market access for the product concerned, that is, would the exported
product still be permitted to enter [the market (Japan in this case)] if
they complied with the prescription contained in the previous
regulations(669)” under the chapeau of
Annex B(5). The Panel was of the
view that even if this situation did not occur, the Panel must still
consider whether the change could be considered to potentially have a
significant effect on the trade of other Members:

“It is not disputed that the present situation is one where ‘an
international standard, guideline or recommendation does not exist …
or the content of a proposed sanitary or phytosanitary regulation is not
substantially the same as the content of an international standard,
guideline or recommendation’. Therefore, we must determine whether the
changes identified above constitute changes which are required to be
notified under Article 7 because, inter alia, they ‘may have a
significant effect on trade of other Members’ in the context of the
chapeau to Paragraph 5 of Annex B.

We consider that the most important factor in this regard is whether
the change affects the conditions of market access for the product
concerned, that is, would the exported product (apple fruit from the
United States in this case) still be permitted to enter Japan if they
complied with the prescription contained in the previous regulations. (670)
If this is not the case, then we must consider whether the change
could be considered to potentially have a significant effect on trade of
other Members. In this regard, it would be relevant to consider whether
the change has resulted in any increase in production, packaging and
sales costs, such as more onerous treatment requirements or more
time-consuming administrative formalities.”(671)

548. Still in this regard, the Panel in Japan — Apples held
that it was barred from addressing legal claims falling outside its
terms of reference. To succeed in a claimunder Article 7 and
Annex B of
the SPS Agreement, the party making the allegation of the change that
was not notified must establish a prima facie case by specifying in what
respect any changes in SPS regulations departed from previous ones:

“We recall that, in EC — Hormones, the Appellate Body
noted that

‘… Panels are inhibited from addressing legal claims falling
outside their terms of reference. However, nothing in the DSU limits the
faculty of a Panel freely to use arguments submitted by any of the
parties — or to develop its own legal reasoning — to support its own
findings and conclusions on the matter under its consideration.’

However, the Appellate Body clarified in Korea — Dairy that
‘[B]oth ‘claims’ and ‘arguments’ are distinct from the ‘evidence’
which the complainant or respondent presents to support its assertions
of facts and arguments’. (672)
We note in this regard that the party
making an allegation must provide sufficient evidence in support of this
allegation, and that a Panel should not entertain a claim for which a
prima facie case has not been made.(673) In the present case, the United
States has effectively argued that Japan had substantially changed its
fire blight measures since the entry into force of the SPS Agreement.
However, the United States limited its argumentation to mention that new
regulations had been implemented and to attach translations of the
regulations to its first written submission. It did not specify in what
respect these new regulations departed from the previous ones.

Indeed, either the United States knows in which respect the 1997
texts differ from the ones they replace — in which case it could and
should have mentioned it in its submissions — or it does not, in which
case it cannot be deemed to have established a prima facie case. In
either situation, for the Panel to examine the regulations at issue to
identify differences would be equivalent to ‘making a case’ for the
United States, something we are not allowed to do. For these reasons we
conclude that the United States did not establish a prima facie case in
relation to the violation of Article 7 and Annex B of the SPS
Agreement.”(674)

550. The Panel in EC — Approval and Marketing of Biotech
Products referred to the text of Article 7 as a confirmation of its
understanding that the term “SPS regulations”, as used in Annex
B,
meant SPS measures:

“Annex B(1) applies to ‘sanitary and phytosanitary regulations’
(hereafter ‘SPS regulations’) which have been ‘adopted’. An
explanatory footnote to Annex B(1) indicates that the term ‘SPS
regulations’ should be understood as meaning ‘[s]anitary and
phytosanitary measures such as laws, decrees or ordinances which are
applicable generally’. That SPS regulations are ‘SPS measures’ is
confirmed by Article 7 which states that Members must notify changes in
their ‘SPS measures’ and provide information on their ‘SPS
measures’ ‘in accordance with the provisions of Annex B’. It can
be inferred from this that the ‘SPS regulations at issue in Annex B(1)
are a sub-category of ‘SPS measures’.”(675)

551. In EC — Approval and Marketing of Biotech Products, the
Panel established that, in a case where the demanding party seeks to
establish an inconsistency with Article 7 on the basis of an alleged
inconsistency with Annex B(1), if the measure in question is not found
inconsistent with Annex B it would similarly be devoid of inconsistency
with Article 7 even on the assumption that Article 7
would be applicable
to the case at hand:

“[W]e have found that the provisions of Annex B(1) are not
applicable to the product-specific measures challenged by the United
States, these measures cannot be inconsistent with these provisions. …
[T]here can then logically be no inconsistency with Article 7
either,
even assuming that Article 7 is applicable to these measures.”(676)

1. Members shall ensure, with respect to any procedure to check and
ensure the fulfilment of sanitary or phytosanitary measures, that:

(a) such procedures are undertaken and completed without undue delay
and in no less favourable manner for imported products than for like
domestic products;

(b) the standard processing period of each procedure is published or
that the anticipated processing period is communicated to the applicant
upon request; when receiving an application, the competent body promptly
examines the completeness of the documentation and informs the applicant
in a precise and complete manner of all deficiencies; the competent body
transmits as soon as possible the results of the procedure in a precise
and complete manner to the applicant so that corrective action may be
taken if necessary; even when the application has deficiencies, the
competent body proceeds as far as practicable with the procedure if the
applicant so requests; and that upon request, the applicant is informed
of the stage of the procedure, with any delay being explained;

(c) information requirements are limited to what is necessary for
appropriate control, inspection and approval procedures, including for
approval of the use of additives or for the establishment of tolerances
for contaminants in food, beverages or feedstuffs;

(d) the confidentiality of information about imported products
arising from or supplied in connection with control, inspection and
approval is respected in away no less favourable than for domestic
products and in such a manner that legitimate commercial interests are
protected;

(e) any requirements for control, inspection and approval of
individual specimens of a product are limited to what is reasonable and
necessary;

(f) any fees imposed for the procedures on imported products are
equitable in relation to any fees charged on like domestic products or
products originating in any other Member and should be no higher than
the actual cost of the service;

(g) the same criteria should be used in the siting of facilities used
in the procedures and the selection of samples of imported products as
for domestic products so as to minimize the inconvenience to applicants,
importers, exporters or their agents;

(h) whenever specifications of a product are changed subsequent to
its control and inspection in light of the applicable regulations, the
procedure for the modified product is limited to what is necessary to
determine whether adequate confidence exists that the product still
meets the regulations concerned; and

(i) a procedure exists to review complaints concerning the operation
of such procedures and to take corrective action when a complaint is
justified.

Where an importing Member operates a system for the approval of the
use of food additives or for the establishment of tolerances for
contaminants in food, beverages or feedstuffs which prohibits or
restricts access to its domestic markets for products based on the
absence of an approval, the importing Member shall consider the use of a
relevant international standard as the basis for access until a final
determination is made.

2. Where a sanitary or phytosanitary measure specifies control at the
level of production, the Member in whose territory the production takes
place shall provide the necessary assistance to facilitate such control
and the work of the controlling authorities.

3. Nothing in this Agreement shall prevent Members from carrying out
reasonable inspection within their own territories.

“[T]he text of Annex C(1)(a) relates to ‘procedures to check
and ensure the fulfilment of SPS measures’, not to develop
SPS measures. However, under the definition of Annex A(1) of the SPS
Agreement, SPS measures include both substantive requirements and
procedures. Therefore, the ‘SPS measure’ referenced in the language
of Annex C(1)(a) may be a requirement to conduct an import risk
assessment prior to allowing for the importation of goods that might
pose sanitary or phytosanitary risks. In that case, the actual import
risk assessment conducted for a specific good might constitute the
procedure to check and ensure the fulfilment of this ‘SPS measure’.”(678)

(b) Application of Annex C(1)

(i) General

553. The Panel in US — Poultry (China) found that
Annex C(1)
does not specify or exclude any type of procedures from its application.
Rather, the Panel considered that Annex C(1) covered any measure that is
aimed at checking and ensuring the fulfilment of SPS measures. The Panel
stated:

“Considering the actual text of Annex C(1) of the SPS Agreement,
the Panel notes that Annex C(1) does not specify, nor exclude, any types
of ‘procedures’. According to our reading, Annex C(1)
basically
requires that ‘any procedure’ is covered by its provisions so long
as that ‘procedure’ is aimed at ‘checking and ensuring the
fulfilment of sanitary or phytosanitary measures’, and is undertaken
in the context of ‘control, inspection, or approval’. In the Panel’s
view, no a priori exclusion is contemplated by the SPS
Agreement.

We find equally important to note that the SPS Agreement does
not specify, or limit, the SPS measures referred to in Annex C(1).
Indeed, Annex C(1) of the SPS Agreement merely provides that any
procedure to check and ensure the fulfilment of SPS measures is subject
to the provisions of items (a) through (i).”(679)

554. The Panel in US — Poultry (China) also determined that
the application of Annex C(1) (and other SPS provisions) is not dictated
by the title or the characterization given to that measure by the Member
maintaining it. The Panel noted:

“The ‘approval procedures’ encompassed by Annex C of the SPS
Agreement may cover a broad array of procedures, as the drafters of
the SPS Agreement did not limit the scope of these ‘procedures’
to any specific type of ‘approval procedures’. Bearing that in mind,
the Panel considers that the application of specific provisions of the SPS
Agreement, such as Annex C(1), is by no means restricted to the
title or the characterization of an SPS measure given to that measure by
the WTO Member maintaining it. To put it differently, it is not because
the United States named its requirements as ‘FSIS equivalence
determination process’ and characterizes it as a purely ‘equivalence’
process, that the only provisions applicable to the measure are those of
Article 4 of the SPS Agreement.”(680)

555. The Appellate Body in Australia — Apples addressed the
issue of what measure may violate the obligation in Annex C(1) and
Article 8 noting that, while procedures are the direct target of the
obligation in these two provisions, this would not necessarily exclude
other types of measures from being subject to the obligation. The
Appellate Body found:

“[T]he obligation in Annex C(1)(a) requires Members to commence,
and to complete specific procedures without undue delay. Thus,
procedures are the direct target of the relevant obligation and those
procedures may themselves be the measure in violation of that
obligation. Yet, it does not follow that other types of measures are
precluded, a priori, from being an appropriate target of a claim
of inconsistency with Annex C(1)(a) and Article
8. In our view, the
obligation to ensure that relevant procedures are undertaken and
completed without undue delay may be infringed through measures other
than the control, inspection and approval procedures themselves, such as
actions that prohibit, prevent or impede undertaking and completing such
procedures ‘without undue delay’, or omissions in the form of a
failure to act ‘without undue delay’. Such measures, even when they
are not, themselves, procedures, could equally give rise to a violation
of Annex C(1)(a) and Article
8.”(681)

(ii) Temporal scope

556. According to the Appellate Body in Australia — Apples,
the text of Annex C(1) suggests that the measures covered by
Article 8
and Annex C(1) must exist prior to the operation, undertaking or
completion of the relevant procedures. The Appellate Body stated:

“[A]rticle 8 refers to the ‘operation of control,
inspection and approval procedures’, and subparagraph (a) of Annex
C(1) requires relevant procedures to be undertaken and completed
without undue delay. Since the procedures referred to in Annex C(1)
are those that check and ensure fulfilment of SPS measures, this
suggests that such measures exist prior to the operation,
undertaking or completion of, the relevant procedures, as the latter
seek to check and ensure fulfilment with the former.”(682)

(c) Annex C(1)(a) first clause

(i) Rationale of the provision

Principle of good faith

557. In EC — Approval and Marketing of Biotech Products, the
Panel found that Annex C(1)(a) first clause was essentially a good faith
obligation requiring Members to proceed with their approval procedures
as promptly as possible, taking account of the need to check and ensure
the fulfilment of their relevant SPS requirements:

“[I]t is pertinent to call attention to the introductory paragraph
of Annex C(1). It indicates that approval procedures serve to ‘check
and ensure the fulfilment of [SPS] measures’. We consider that if
approval procedures serve to check and ensure the fulfilment of SPS
requirements, then Members applying such procedures must in principle be
allowed to take the time that is reasonably needed to determine with
adequate confidence whether their relevant SPS requirements are
fulfilled, at least if these requirements are WTO-consistent. Put
another way, we view Annex C(1)(a), first clause, essentially as a good
faith obligation requiring Members to proceed with their approval
procedures as promptly as possible, taking account of the need to check
and ensure the fulfilment of their relevant SPS requirements.
Consequently, delays which are justified in their entirety by the need
to check and ensure the fulfilment of a Member’s WTO-consistent SPS
requirements should not, in our view, be considered ‘undue’.”(683)

Enforcement of SPS provisions

558. In EC — Approval and Marketing of Biotech Products, the
Panel ruled that the purpose of Annex C(1)(a) is to ensure the
enforcement of the SPS Agreement. The Panel considered that by providing
for a prompt settlement of approval procedures, this article serves, in
line with the preamble of the SPS Agreement, the overall purpose of
urging Members to apply rapidly and conclusively the requirements of the
Agreement:

“[I]f the time taken by a Member to complete an approval procedure,
or a particular stage thereof, exceeds the time that is reasonably
needed to check and ensure the fulfilment of its relevant SPS
requirements, for instance because the Member concerned did not proceed
as expeditiously as could be expected of it in the circumstances, the
delay caused in this way would, in our view, be ‘undue’. This
interpretation of Annex C(1)(a) is supported by the object and purpose
of the SPS Agreement. The fourth preambular paragraph of the SPS
Agreement states that one particular object and purpose of the SPS
Agreement is ‘the establishment of a multilateral framework of
rules and disciplines to guide the […] enforcement of sanitary and
phytosanitary measures in order to minimize their negative effects on
trade’. Annex C(1)(a), first clause, establishes disciplines
concerning the ‘enforcement’ of SPS measures, namely, approval
procedures. If Annex C(1)(a), first clause, were interpreted to mean
that Members need not undertake and complete their approval procedures
as soon as possible under the circumstances, we think the object and
purpose of minimizing negative trade effects of approval procedures
could not be achieved.”(684)

(ii) “undertake and complete”

559. In EC — Approval and Marketing of Biotech Products, the
Panel held that the phrase “undertake and complete” covers all
stages of approval procedures and should be taken to mean that, once an
application has been received, approval procedures must be started and
then carried out from beginning to end:

“The verb ‘undertake’ makes clear that Members are required to
begin, or start, approval procedures after receiving an application for
approval. The verb ‘complete’, on the other hand, indicates that
approval procedures are not only to be undertaken, but are also to be
finished, or concluded. Thus, in our view, the phrase ‘undertake and
complete’ covers all stages of approval procedures and should be taken
as meaning that, once an application has been received, approval
procedures must be started and then carried out from beginning to end.”(685)

560. The Panel in Australia — Apples held that it is
perfectly plausible that an unduly delayed specific approval process is
found inconsistent with Annex C(1)(a) (and consequently
Article 8) of
the SPS Agreement, even if that process does not lead to the adoption of
substantive SPS requirements. The Panel noted that there could be
situations where an approval process simply takes too long for the
complainant, especially if the complainant is prevented from exporting
the goods in question during that period. In such circumstances, the
Panel found that it would be inappropriate if the complainant were
prevented from initiating a WTO dispute merely because the lengthy
approval process did not lead to substantive SPS requirements. A
different interpretation would empty out the procedural requirement
contained in the first clause of Annex C(1)(a) of the SPS
Agreement.(686)

(iii) “without undue delay”

Definition

561. In EC — Approval and Marketing of Biotech Products, the
Panel, on interpreting the phrase without undue delay, connected it to
the preceding words and considered that it addresses both the verbs “undertake”
and “complete”, where it comes that the requirement to proceed
rapidly relates to these two actions equally:

“There is one additional aspect of Annex C(1)(a), first clause,
which it is appropriate to address before examining the merits of the
claims before us. The phrase ‘without undue delay’ follows the
phrase ‘undertake and complete’. We consider that the phrase ‘without
undue delay’ relates, not just to the immediately preceding verb ‘complete’,
but to both elements of the phrase ‘undertake and complete’. In
other words, we consider that Annex C(1)(a), first clause, should be
read as requiring that Members must ‘undertake’ approval procedures
‘without undue delay’ and, subsequently, ‘complete’ them ‘without
undue delay’. Were it otherwise, a Member could easily circumvent the
requirement to complete approval procedures without undue delay by
causing undue delay in the undertaking of approval procedures.”(687)

562. Having ruled that the phrase “without undue delay” concerns
both the verbs “undertake” and “complete” in the preceding
clause, the Panel in EC — Approval and Marketing of Biotech
Products, contemplated the liabilities which might come from a
failure to observe this provision. The Panel emphasized the overall need
to act rapidly in the completion of the whole approval process
regardless of the time that might have been saved in some previous
procedural steps:

“The view that the phrase ‘without undue delay’ relates to both
elements of the phrase ‘undertake and complete’ implies that if a
Member causes undue delay at any stage in an approval procedure, this
would constitute a breach of the provisions of Annex C(1)(a), first
clause. In our view, there would be a breach of Annex C(1)(a)
even if
the Member concerned completed one or more previous stages of the
approval procedure sooner than could be expected. If, contrary to our
view, a Member could balance undue delay in the completion of a
particular procedural stage against a period of time ‘saved’ at an
earlier stage in the approval procedure, the implication would be that
in some cases a Member could temporarily delay the completion of an
approval procedure even though there is no need to do so. We consider
that such an interpretation of Annex C(1)(a), first clause, would not be
supported by the object and purpose of the SPS Agreement. In
particular, we consider that interpreting Annex C(1)(a), first clause,
as permitting a Member temporarily to delay the completion of an
approval procedure even when there is no need for a delay would not be
consistent with the previously mentioned object and purpose of
minimizing negative trade effects of approval procedures.”(688)

563. The Panel in EC — Approval and Marketing of Biotech
Products found that the phrase “undue delay” as used in Annex C(1)(a)
means “without an unjustified loss of time”:

“It is clear from the text of Annex C(1)(a), first clause, that not
every delay in the undertaking or completion of approval procedures
which is caused by a Member is contrary to the provisions of Annex C(1)(a), first clause. Only ‘undue’ delay is.(689) Regarding the
meaning of the phrase ‘undue delay’, we consider that of the
dictionary meanings of the term ‘delay’ which have been identified
by the United States, there is one which fits naturally with the
provisions of Annex C(1)(a), first clause, namely, ‘(a period of) time
lost by inaction or inability to proceed’. So far as concerns the term
‘undue’, of the dictionary meanings referred to by the United States
we find two to be particularly relevant in the specific context of Annex C(1)(a), first clause — ‘[g]oing beyond what is warranted […]’
and ‘unjustifiable’. We note that the United States, Canada and the
European Communities have all identified ‘unjustifiable’ as a
relevant meaning of ‘undue’. This view is supported also by the
French version of Annex C(1)(a), first clause, which refers to ‘retard
injustifié’. Thus, based on the ordinary meaning of the phrase ‘without
undue delay’, we consider that Annex C(1)(a), first clause, requires
that approval procedures be undertaken and completed with no
unjustifiable loss of time.”(690)

564. The Appellate Body in Australia — Apples referred to
the dictionary meanings of the words “undue” and “delay” in
establishing the meaning of the phrase “without undue delay”. The
Appellate Body stated:

“Annex C(1)(a) contains an obligation that relevant procedures be
undertaken and completed ‘without undue delay’. In this regard, the
ordinary meaning of the word ‘delay’ relates to ‘(a period of)
time lost by inaction or inability to proceed’. The term ‘undue’
means something ‘that ought not to be or to be done, inappropriate,
unsuitable, improper, unrightful, unjustifiable’, or ‘going beyond
what is warranted or natural; excessive, disproportionate’. Thus, Annex C(1)(a)
requires Members to ensure that relevant procedures are
undertaken and completed with appropriate dispatch, that is, they do not
involve periods of time that are unwarranted, or otherwise excessive,
disproportionate or unjustifiable.”(691)

Determination of “undue delay”

565. The Panel in EC — Approval and Marketing of Biotech
Products found that an “undue delay” is determined not by the
length of the delay, but by whether the delay was justified. The Panel
concluded, that such determinations must be made on a case-by-case
basis:

“[I]n our view, Annex C(1)(a), first clause, requires that there
not be any unjustifiable loss of time. Thus, what matters is whether
there is a legitimate reason, or justification, for a given delay, not
the length of a delay as such. Accordingly, if a Member causes a
relatively short, but unjustifiable delay, we do not consider that the
mere fact that the delay is relatively short would, or should, preclude
a Panel from finding that it is ‘undue’. Similarly, we do not
consider that a demonstration that a particular approval procedure has
been delayed by, say, two years would always and necessarily be
sufficient to establish that the relevant procedure has been ‘unduly’
delayed. Having said this, we note that a lengthy delay for which no
adequate explanation is provided might in some circumstances permit the
inference that the delay is ‘undue’

…

In our view, a determination of whether a particular approval
procedure has been undertaken and/or completed ‘without undue delay’
must be made on a case-by-case basis, taking account of relevant facts
and circumstances. We therefore consider that it would be neither
possible nor useful to attempt to define the reasons which would render
a given delay ‘undue’, and those which would not render it ‘undue’”.(692)

566. In EC — Approval and Marketing of Biotech Products, the
Panel rejected the view that a delay could be considered undue if caused
by a measure which is not supported by scientific evidence. The Panel
listed several examples of delays originating from governmental
interventions, not supported by scientific evidence but nevertheless not
“undue” within the meaning of Annex C:

“Canada argues that a delay in undertaking and completing an
approval procedure must be considered ‘undue’ if the delay is caused
by a measure which is not based on scientific evidence. We would agree
that delays caused by measures which are not based on scientific
evidence may in some cases be considered ‘undue’.(693) However, we do
not agree that such delays must in all cases be considered ‘undue’.
A delay in undertaking and completing an approval procedure may be
caused by a temporary government shutdown in the wake of a natural
disaster or civil unrest. Likewise, if a Member is confronting an
unforeseeable and sharp increase in the number of products submitted for
approval, this could cause a short delay in the processing of some or
all pending applications, due to the need for that Member to reallocate
existing resources, or to obtain additional resources, to deal with the
new situation.(694) In both examples provided, the delay would be caused
by government action, or inaction, which is not supported by scientific
evidence. Yet, in our view, there is a convincing argument to be made
that the delay would be needed for the Member to be able to check and
ensure the fulfilment of relevant SPS requirements. Therefore, we
consider that, in both cases, the delay in undertaking and completing
approval procedures could properly be viewed as not ‘undue’ and
hence not inconsistent with Annex C(1)(a), first clause.”(695)

567. In Australia — Apples, the Appellate Body concluded
that “[w]hether a relevant procedure has been unduly delayed is
therefore not an assessment that can be done in the abstract, but one
which requires a case-by-case analysis as to the reasons for the alleged
failure to act with appropriate dispatch, and whether such reasons are
justifiable”.(696)

Applying precaution while avoiding “undue delay”

Requirements of prudence and precaution

568. In EC — Approval and Marketing of Biotech Products, the
Panel agreed with the European Communities’ argument that precaution
and prudence need to be observed in the adoption and implementation of
GMO-related legislation. However, the Panel set out the standard of
review that it would apply in order to assess whether the measures duly
entail delays or if the Members overly and purposely extended the
allowable timeframe when drafting their SPS requirements:

“As an initial matter, we note that, in our view,
Annex C(1)(a),
first clause, does not preclude the application of a prudent and
precautionary approach to identifying, assessing and managing risks to
human health and the environment arising from GMOs and GMO-derived
products. As we have said, we consider that Annex
C(1)(a), first clause,
allows a Member to take the time that is reasonably needed to determine
with adequate confidence whether its relevant SPS requirements are
fulfilled. Consistent with this, we consider that a Member which finds
it appropriate to follow a prudent and precautionary approach in
assessing and approving applications concerning GMOs and GMO-derived
products, might, for instance, be justified in requesting further
information or clarification of an applicant in a situation where
another Member considers that the information available is sufficient to
carry out its assessment and reach a decision on an application.(697)
Whether a particular request is a reflection of genuine caution and
prudence or whether it is a pretext to delay the completion of an
approval procedure would need to be determined in the light of all
relevant facts and circumstances.”(698)

569. The Panel in EC — Approval and Marketing of Biotech
Products found that although Members are permitted to take actions
with precaution and prudence, they must do so within reasonable time
limits, otherwise Annex C(1)(a) would lose meaning:

“[W]e perceive no inherent tension between the obligation set out
in Annex C(1)(a), first clause, to complete approval procedures without
undue delay and the application of a prudent and precautionary approach
to assessing and approving GMOs or GMO-derived products. Nevertheless,
it is clear that application of a prudent and precautionary approach is,
and must be, subject to reasonable limits, lest the precautionary
approach swallow the discipline imposed by Annex
C(1)(a), first clause.
Indeed, if a Member could endlessly defer substantive decisions on the
grounds of a perceived need for caution and prudence in the assessment
of applications, Annex C(1)(a), first clause, would be devoid of any
meaning or effect. In applying the provisions of Annex
C(1)(a), first
clause, it is therefore important always to bear in mind that Annex
C(1)(a), first clause, implies as a core obligation the obligation to
come to a decision on an application.”(699)

Delays supported by evolving science and precautionary approach

570. Having addressed the status of the precautionary principle in
international law, the Panel in EC — Approval and Marketing of
Biotech Products discussed the impact of the principle on the delay
noted in the implementation of SPS measures. In this context the Panel
examined “whether evolving science and the consequent application by
the European Communities of a prudent and precautionary approach would
provide a justification for delays which may have occurred due to the
European Communities’ general suspension of final approvals between
June 1999 and August 2003”. Drawing from its observation that no
tension exists between the precautionary approach and the requirement of
avoiding undue delays, the Panel placed emphasis on the provisions of
Article 5.7 and ruled out the European Communities’ reliance on the
precautionary principle to postpone the adoption of SPS requirements:

“The European Communities argues that in the case of applications
concerning GMOs and GMO-derived products it is difficult to come to a
decision, in view of evolving science and a body of available scientific
information and data that is still limited. Even if we were to accept
this as an accurate description of the situation as it prevailed between
June 1999 and August 2003, we consider that in the light of the
provisions of Annex C(1)(a), first clause, this situation in and of
itself would not warrant delays in the completion of approval
procedures.

We note in this regard that if relevant scientific evidence were
insufficient to perform a risk assessment as defined in Annex A(1) of
the SPS Agreement and as required by Article 5.1 of the SPS
Agreement, pursuant to Article 5.7 of the SPS Agreement, a
Member may provisionally adopt an SPS measure on the basis of available
pertinent information. Contrariwise, in situations where relevant
scientific evidence is sufficient to perform a risk assessment, a Member
must base its SPS measure on a risk assessment. Of course, the mere fact
that relevant scientific evidence is sufficient to perform a risk
assessment does not mean that the result and conclusion of the risk
assessment are free from uncertainties (e.g., uncertainties
linked to certain assumptions made in the course of the performance of a
risk assessment). Indeed, we consider that such uncertainties may be
legitimately taken into account by a Member when determining the SPS
measure, if any, to be taken. In view of these uncertainties, a given
risk assessment may well support a range of possible measures. Within
this range, a Member is at liberty to choose the one which provides the
best protection of human health and/or the environment, taking account
of its appropriate level of protection, provided that the measure chosen
is reasonably supported by the risk assessment and not inconsistent with
other applicable provisions of the SPS Agreement, such as Article
5.6.”(700)

Distinction between undue delay and a refusal to take SPS action

571. Although the Panel in EC — Approval and Marketing of
Biotech Product declined to settle on a definitive meaning of what
constitutes “undue delay”, it did determine that Members cannot
justify refusing to take substantive SPS decisions because of evolving
science, scientific complexity, uncertainty, and/or limited available
scientific information or data:

“[E]volving science, scientific complexity and uncertainty, and
limited available scientific information or data are not, in and of
themselves, grounds for delaying substantive approval decisions, and
that the SPS Agreement does not envisage that Members in such cases
defer making substantive SPS decisions. Indeed, even in cases where
relevant scientific evidence does not permit the performance of a risk
assessment, the SPS Agreement envisages that Members take substantive
SPS decisions. Certainly, such factors as evolving science and limited
availability of scientific evidence affect the confidence which Members
can have in the results of their assessments. But they do not inherently
affect a Member’s ability to reach substantive decisions on an
application, particularly since a Member may take account of such
factors in reaching substantive decisions.”(701)

572. In EC — Approval and Marketing of Biotech Products, the
Panel acknowledged that, in cases where scientific discoveries are
likely to occur in a given field, delays could allow decisions which
take into account latest evidence or fill the existing gaps in the
scientific justification of the measure. However, the Panel took the
view that the SPS Agreement, in Articles 5.1 and
5.7, offers the
possibility to grant time-limited approvals or refuse approvals at any
stage of scientific knowledge, without occasioning undue delays:

“It is quite possible that in the situation described by the
European Communities where science evolves and there is limited
available scientific evidence, a deferral of substantive decisions might
allow for better decisions at a later point in time, provided that
appropriate analyses and research are undertaken. However, we do not
consider that Annex C(1)(a), first clause, can or should be interpreted
to allow Members to go into a sort of holding pattern while they or
other entities undertake research with a view to obtaining additional
scientific information and data. As we have stated earlier, the core
obligation implied by Annex C(1)(a), first clause, is for Members to
come to a substantive decision. This view is entirely consistent, and
fits well with the aforementioned provisions of Article 5.1 and
Article 5.7.(702) It is important to note in this regard that the SPS Agreement
nowhere states that substantive decisions on applications need to
give a straight yes or no answer to applicants. Members may in principle
grant time-limited approvals or approvals subject to other appropriate
conditions. Alternatively, they may in principle decide to reject an
application subject to the possibility of a review of that decision if
and when relevant circumstances change. Relevant circumstances could
include the state of scientific knowledge. Thus, there is no reason to
consider that our interpretation of Annex C(1)(a), first clause, would
prejudice Members’ ability to take differentiated, proportionate
action to protect human health and/or the environment from potential
risks arising from GMOs or GMO-derived products.”(703)

Delay due to failures in the national legislation

573. The Panel found that the delays challenged in EC — Approval
and Marketing of Biotech Products, were not justified by the need to
check and ensure the fulfilment of the relevant SPS requirements. The
Panel added that, as a practical matter, the need for regular adjustment
and amendment of relevant legislation is to be expected. The Panel
considered that if a Member could suspend and delay the granting of
final approvals every time it updated its approval legislation, there
would be long periods of time during which final approval decisions
would be suspended:

“[T]he lack of EC-level legislation ensuring labelling and
traceability did not affect the European Communities’ ability to check
the fulfilment of its existing SPS requirements. Finally, even if
the European Communities considered that new and additional requirements
relating to labelling and traceability needed to be imposed as
conditions attached to approval decisions, to ensure the
fulfilment of existing SPS requirements (e.g., the requirement to
avoid long-term adverse effects on the environment), there is no reason
for believing that the need for, and modalities of, such conditions
could only be established in September 2003.

…

Two further considerations militate in favour of our view that the
lack of legislation ensuring labelling and traceability of GMOs and GMO-derived
products would not have provided an eo ipso justification for
delays which might have occurred for this reason in the completion of
approval procedures. To begin with, putting in place new legislation is
by nature a time-consuming process which not infrequently takes one or
more years to complete. The European Communities itself stated that
completing and updating its legislation ‘inevitably took quite some
time to be completed in the light of the serious social and political
debate on the issues linked to GMOs and GM food production’. We also
note the EC statement that legislation concerning GMOs and GMO-derived
products needs to keep pace with the ‘constant evolution of the
scientific and regulatory debate’ on these products, which suggests
that a need for regular adjustment and amendment of relevant legislation
is to be expected. The evolution of relevant EC legislation would appear
to support this statement. In these circumstances, we are concerned that
if a Member could suspend and, consequently, delay the granting of final
approvals essentially every time it completes and updates its approval
legislation, there might be frequent and long periods of time during
which final approval decisions are suspended. Incidentally, given the
time required to revise legislation, a need for further revision and
updating might in some cases be identified even before the previous
revision has made its way through the legislative process.”(704)

Delays as a means of avoiding risk assessment

574. The Panel in EC — Approval and Marketing of Biotech
Products observed that a Member may deliberately use delays as a
risk management instrument: the Member would postpone the adoption of a
measure which is at odds with the present legal framework, awaiting
occurrence of better legislative conditions. The Panel commented that
this attitude would be inconsistent with Annex
C(1)(a) and the SPS
provisions addressing the risk assessment regime:

“The other consideration to be noted relates to the use of
procedural delay as an instrument to manage or control risks. It is
useful to illustrate this using an example. For instance, if the
European Communities delayed the completion of a particular approval
procedure because existing legislation precluded it from imposing a
traceability requirement for a GMO which would facilitate the withdrawal
of the product in the event of unforeseen adverse effects on human
health or the environment, the European Communities would effectively
use procedural delay as a substitute for a substantive risk management
measure (the traceability requirement) that would not be imposable under
existing approval legislation. In our view, however, the pursuit of a
risk management objective would not justify a delay in the completion of
an approval procedure and hence would be inconsistent with Annex
C(1)(a), first clause. If procedural delay could be used, directly or
indirectly, as an instrument to manage or control risks, then Members
could evade the obligations to be observed in respect of substantive SPS
measures, such as Article 5.1, which requires that SPS measures be based
on a risk assessment. Clearly, we cannot interpret Annex
C(1)(a), first
clause, in a manner which would nullify or impair the usefulness and
intended effect of other provisions of the SPS Agreement. Indeed,
as we see it, a central purpose of Annex C(1)(a), first clause, is
precisely to prevent a situation where Members avoid the substantive
disciplines which Articles 2 and 5 of the SPS Agreement impose
with respect to substantive SPS decisions by not reaching final
substantive decisions on applications for marketing approval.”(705)

(d) Annex C(1)(a) second clause

575. The Panel in EC — Approval and Marketing of Biotech
Products found that in order to establish an inconsistency with
Annex C(1)(a) second clause, a complainant must establish that the
imported products have been treated in a “less favourable manner”
than domestic products with respect to the undertaking and completion of
approval procedures. The complainant must also establish that the
imported products which are alleged to have been treated less favourably
are “like” the domestic products which are alleged to have been
treated more favourably:

“In order to establish an inconsistency with
Annex C(1)(a), second
clause, Argentina must establish (i) that imported products have been
treated in a ‘less favourable manner’ than domestic products in
respect of the undertaking and completion of approval procedures, and
(ii) that the imported products which are alleged to have been treated
less favourably are ‘like’ the domestic products which are alleged
to have been treated more favourably. If either one of these two
elements is not met, that is, if imported products have not been treated
‘less favourably’ than the domestic products to which they are being
compared, or if these domestic products are not ‘like’ the relevant
imported products, Argentina’s claim of inconsistency must fail.”(706)

576. As Annex C(1)(a) second clause sets out a “national treatment
obligation”, the Panel in EC — Approval and Marketing of Biotech
Products referred to the past panel and Appellate Body rulings on
Article III:1 and III:4 of the
GATT. The Panel concluded that
differential treatment of like products does not by itself demonstrate
less favourable treatment. Additionally, an unfavourable result for an
application for placing an imported product on the market would not be
sufficient to establish less favourable treatment:

“Reading Annex C(1)(a), second clause, in the light of the
jurisprudence on Article III:4,we consider that in undertaking and
completing its approval procedures, a Member may, in principle,
differentiate between products that have been found to be like because
this would not, by itself, mean that the relevant approval procedures
have been undertaken or completed in less favourable manner for the
group of like imported products than for the group of like domestic
products. In particular, a mere showing that a Member has undertaken or
completed a particular approval procedure in a manner which is
unfavourable for a given imported product would not be sufficient to
establish a ‘less favourable manner’ of undertaking or completing
approval procedures if the relevant Member’s conduct is explained by
factors or circumstances unrelated to the foreign origin of the product.”(707)

(e) Annex C(1)(b)

(i) General

577. In EC — Approval and Marketing of Biotech Products, the
Panel ruled that the provisions of Annex C(1)(b) apply “with respect
to any procedure to check and ensure the fulfilment of sanitary or
phytosanitary measures”.(708)

578. The Panel in EC — Approval and Marketing of Biotech
Products remarked that Annex C(1)(b) sets out five separate, but
related, obligations to observed by Members in the operation of their
approval procedures: “Annex C(1)(b) essentially sets out five
separate, but related, obligations to be observed by Members in the
operation of approval procedures. These obligations relate to:

(i) the publication or communication to applicants of the processing
period of each procedure;

(ii) the examination of the completeness of the documentation and the
communication to applicants of deficiencies;

(iii) the transmission of the results of the procedure;

(iv) the processing of applications which have deficiencies; and

(v) the provision of information about the stage of a procedure and
the provision of an explanation of any delay.”(709)

(ii) First obligation in Annex C(1)(b): publication or communication
of processing period

579. In EC — Approval and Marketing of Biotech Products, the
United States argued that as a result of its general moratorium on
approvals, the European Communities did not follow the standard
processing periods which are published in its applicable approval
legislation. The Panel ruled that the lack of publication was not a
result of the measure at issue. The Panel also considered that the
anticipated processing period is to be provided to applicants upon
request and in this dispute, no evidence of applicants’ requests was
provided:

“Even if we were to accept that what has to be published in
accordance with the first obligation in Annex C(1)(b)
is the ‘effective’
standard processing period, and that the general moratorium on approvals
effectively modified the European Communities’ published standard
processing periods, the fact that they were unpublished would not be a
consequence of the measure at issue, i.e., the general
moratorium. Rather, it would be a consequence of a separate and
independent failure by the European Communities to publish the new
standard processing periods. This is confirmed by the fact that the
European Communities could apply the general moratorium on approvals and
at the same time publish any new standard processing periods.

…

The United States’ second argument in support of its claim under
Annex C(1)(b) is that since the European Communities does not
acknowledge the moratorium, the anticipated processing period is not
communicated to the applicant. We note that pursuant to Annex C(1)(b)
the anticipated processing period is to be communicated to the applicant
“upon request”. The United States has provided no evidence to show (i)
that an applicant requested that the anticipated processing period be
communicated to it, (ii) that the request was denied by a relevant EC
entity, and (iii) that this was because of the general moratorium on
approvals. Moreover, we do not think that the general moratorium on
approvals necessarily resulted in the European Communities not
communicating the anticipated processing periods to applicants upon
request. The European Communities could apply the general moratorium on
approvals and at the same communicate to applicants the anticipated
processing periods upon request.”(710)

(iii) Second obligation in Annex C(1)(b): completeness of
documentation

580. In EC — Approval and Marketing of Biotech Products, the
United States argued that because of the general moratorium on
approvals, the European Communities did not promptly examine the
completeness of documentation and inform applicants of any deficiencies.
The Panel rejected this argument observing that the US challenge was not
supported by evidence. The Panel concluded that the alleged lack of
completed documentation was not the result of the measure at issue:

“We note that the United States has identified no concrete evidence
to support this assertion. Moreover, we do not think that the general
moratorium on approvals necessarily resulted in the European Communities
not examining promptly the completeness of documentation and not
informing applicants of any deficiencies. The European Communities could
apply the general moratorium on approvals and at the same time examine
the completeness of documentation and inform applicants of deficiencies
in the documentation submitted.(711)”(712)

(iv) Third obligation in Annex C(1)(b): transmission of results

581. In EC — Approval and Marketing of Biotech Products, the
United States raised the contention that under the measure at issue, the
results of procedures were not promptly communicated to applicants so
that corrective action could be taken. The Panel considered that the
United States had failed to establish its claim under the third
obligation contained in Annex C(1)(b) as it did not identify the results
that were to be transmitted:

“We note that the United States has not identified any results of
procedures which were not transmitted to an applicant as soon as
possible and in a precise and complete manner. Moreover, we do not think
that the general moratorium on approvals necessarily resulted in the
European Communities not transmitting as soon as possible, and in a
precise and complete manner, the results of approval procedures.
Furthermore, it should be recalled that under the general moratorium,
the European Communities prevented final results from being achieved.
Thus, there were no final results which could have been communicated to
applicants.”(713)

582. In EC — Approval and Marketing of Biotech Products, the
United States complained that under the general moratorium, the
respondent in that dispute did not proceed as far as practicable in the
approval process. The Panel disagreed with this view and commented that
the complainant did not provide evidence of the applicant making such
request and had the applicant made such request, the European
Communities failure to proceed with procedures would not be a result of
the measure at issue:

“We note that pursuant to Annex C(1)(b)
the competent body is to
proceed as far as practicable with the procedure ‘if the applicant so
requests’. The United States has provided no evidence of an applicant
making such a request and of a relevant EC entity denying that request
because of the general moratorium. Moreover, we do not think that the
general moratorium on approvals necessarily resulted in the European
Communities not proceeding as far as practicable with procedures if
applicants so requested. The European Communities could apply the
general moratorium on approvals and at the same time proceed as far as
practicable with procedures upon request.”(714)

(vi) Fifth obligation in Annex C(1)(b): explanation of delay

583. The Panel in EC — Approval and Marketing of Biotech
Products, dismissed the United States’ argument that the
respondent did not comply with the fifth obligation under Annex C(1)(b).
The Panel found that the United States did not submit any evidence that
it had made a request for an explanation of the delay:

“The fifth obligation states that ‘upon request’ the applicant
is to be informed of the stage of the procedure, with any delay being
explained. The United States has provided no evidence of an applicant
making such a request and of a relevant EC entity denying an explanation
of any delay because of the general moratorium. Moreover, we do not
think that the general moratorium on approvals necessarily resulted in
the European Communities not informing applicants of the stage of
procedures and not explaining any delays, if applicants so requested.
The European Communities could apply the general moratorium on approvals
and at the same time inform applicants of the stage of procedures and
explain any delays.”(715)

(f) Annex C(1)(c)

584. In Australia — Salmon (Article 21.5 — Canada), Canada
claimed that Australia acted inconsistently with its obligations under
Annex C(1)(c). The Panel noted that only “procedures to check and
ensure the fulfilment of sanitary or phytosanitary measures” fall
under the scope of paragraph 1(c) of Annex C. The Panel also considered
that the Australian requirements referred to by Canada were “substantive
sanitary measures in their own right” and not “procedures to check
and ensure the fulfilment of sanitary or phytosanitary measures”. The
Panel thus concluded that no violation of
Annex C(1)(c) was established.(716)

(g) Annex C(1)(e)

585. In EC — Approval and Marketing of Biotech Products,
Argentina argued that the detailed requirements of the EC legislation
and regulation did not meet the criteria that they be limited to what is
reasonable and necessary. The Panel did not address these two particular
requirements merely observing that Annex C(1)(e) focuses on the approval
requirements of “individual specimens” whereas the challenged
measures did not concern “individual specimens”:

“We note that Annex C(1)(e)
imposes limitations on any requirements
for approval of ‘individual specimens of a product’. The
product-specific measures challenged by Argentina do not concern ‘individual
specimens’ of biotech products. They concern specific biotech products
for which marketing approval has been sought.”(717)

2. Relationships with other provisions of the SPS Agreement

(a) Article 4

586. The Panel in US — Poultry (China) found that while the
recognition of equivalence is governed by Article 4 of the SPS
Agreement, the equivalence determination process of the importing Member
must still comply with the obligations on “approval procedures”
under Annex C(1), particularly where a Member uses equivalence
recognition as the only route for access into its market. The Panel
stated:

“The Panel acknowledges that nothing in the SPS Agreement seems
to prevent a Member from using an equivalent process to determine
whoever is eligible to export certain products to its market. …
Nevertheless, we are of the view that, where the recognition of
equivalence (as the one granted through the FSIS equivalence
determination process) is the only way that a Member may export its
products to an importing Member, then the equivalence determination
process of the importing Member must comply with the pertinent
obligations on ‘approval procedures’ under Annex C(1) of the SPS
Agreement.

…

[T]he Panel understands that to deny that an equivalence
determination process, which also has the ultimate effect of approving
the importation of a product from a given WTO Member as envisaged in any
other ‘approval procedure’, is subject to Annex C(1) of the SPS
Agreement would unfairly reward the ingenuity of some WTO Members
and possibly create a dangerous safe haven for disguised protectionism.
Such an understanding would result in an undesired precedent that may
entice some WTO Members to circumvent the application of the SPS
Agreement.”(718)

(b) Article 8

587. In EC — Approval and Marketing of Biotech Products, the
Panel ruled that the provisions of Article 8 and those of
Annex C need
to be read together and consequently, whenever the first paragraph of
Annex C(1) is violated, Article 8 is likewise affected:

“We recall that the United States and Canada seek to establish an
inconsistency with Article 8 of the SPS Agreement on the basis of
an inconsistency with Annex C(1)(a). Article 8 requires, inter alia,
that Members observe the provisions of Annex C in the operation of their
approval procedures. It follows that a failure to observe the provisions
of Annex C(1)(a) implies a breach of Article
8. We have determined above
that, as a result of the general de facto moratorium on
approvals, the European Communities has failed, in at least one approval
procedure conducted under Directives 90/220 and 2001/18, to observe the
provisions of Annex C(1)(a), first clause. Accordingly, we conclude that
in respect of the aforementioned approval procedure, the European
Communities has, by implication, also acted inconsistently with the
provisions of Article 8.”(719)

XIX. Relationship of the SPS Agreement with other WTO Agreements
back to top

590. The Panel in EC — Hormones decided that both the SPS
Agreement and the GATT 1994 applied to the European Communities’
measure at issue. The Panel then addressed the question of which of the
two Agreements to examine first:

“The SPS Agreement specifically addresses the type of
measure in dispute. If we were to examine GATT first, we would in any
event need to revert to the SPS Agreement: if a violation of GATT
were found, we would need to consider whether Article XX(b) could be
invoked and would then necessarily need to examine the SPS Agreement;
if, on the other hand, no GATT violation were found, we would still need
to examine the consistency of the measure with the SPS Agreement since
nowhere is consistency with GATT presumed to be consistency with the SPS
Agreement. For these reasons, and in order to conduct our
consideration of this dispute in the most efficient manner, we shall
first examine the claims raised under the SPS Agreement.”(721)

591. The Panel in Australia — Salmon also dealt with the
question whether to first address the claims under the GATT 1994 or
those under the SPS Agreement:

“Canada recognizes that the SPS Agreement provides for obligations
additional to those contained in GATT 1994, but, nevertheless, first
addresses its claim under Article XI of GATT
1994. Australia invokes
Article 2.4 of the SPS Agreement, which presumes GATT consistency for
measures found to be in conformity with the SPS Agreement, to first
address the SPS Agreement. We note, moreover, that (1) the SPS Agreement
specifically addresses the type of measure in dispute, and (2) we will
in any case need to examine the SPS Agreement, whether or not we find a
GATT violation (since GATT consistency is nowhere presumed to constitute
consistency with the SPS Agreement). In order to conduct our
consideration of this dispute in the most efficient manner, we shall,
therefore, first address the claims made by Canada under the SPS
Agreement before addressing those put forward under GATT 1994.”(722)

2. Article III and Article XI

(a) The Panel’s exercise of judicial economy

592. In EC — Hormones, the Panel stated: “Since we have
found that the EC measures in dispute are inconsistent with the
requirements of the SPS Agreement, we see no need to further examine
whether the EC measures in dispute are also inconsistent with Articles
III or XI of GATT.”(723)

593.
In Australia — Salmon, the Panel stated: “Since we
have found that the measure in dispute is inconsistent with the
requirements of the SPS Agreement, we see no need to further examine
whether it is also inconsistent with Article XI of GATT
1994.”(724)

3. Article XX(b)

594. In EC — Hormones, the European Communities submitted
that “the ‘substantive’ provisions of the SPS Agreement can only
be addressed if recourse is made to GATT Article XX(b), i.e., if, and
only if, a violation of another provision of GATT is first established”.
The Panel, rejected this argument, stating:

“According to Article 1.1 of the SPS Agreement, two
requirements need to be fulfilled for the SPS Agreement to apply:
(i) the measure in dispute is a sanitary or phytosanitary measure; and
(ii) the measure in dispute may, directly or indirectly, affect
international trade. There are no additional requirements. The SPS
Agreement contains, in particular, no explicit requirement of a
prior violation of a provision of GATT which would govern the
applicability of the SPS Agreement, as asserted by the European
Communities.”(725)

595. With respect to the relationship between the SPS Agreement and
Article XX(b) of the GATT 1994, the Panel in EC — Hormones took
the view that “[m]any provisions of the SPS Agreement impose ‘substantive’
obligations which go significantly beyond and are additional to the
requirements for invocation of Article XX(b)”:

“[W]e find the EC claim that the SPS Agreement does not impose ‘substantive’
obligations additional to those already contained in Article XX(b) of
GATT not to be persuasive. It is clear that some provisions of the SPS
Agreement elaborate on provisions already contained in GATT, in
particular Article XX(b). The
final preambular paragraph of the SPS
Agreement provides, indeed, that the Members desired ‘to elaborate
rules for the application of the provisions of GATT 1994 which relate to
the use of sanitary or phytosanitary measures, in particular the
provisions of Article XX(b)’. Examples of such rules are, arguably,
some of the obligations contained in Article 2 of the SPS
Agreement.
However, on this basis alone we cannot conclude that the SPS Agreement
only applies, as Article XX(b) of GATT does, if, and only if, a prior
violation of a GATT provision has been established. Many provisions of
the SPS Agreement impose ‘substantive’ obligations which go
significantly beyond and are additional to the requirements for
invocation of Article XX(b). These obligations are, inter alia, imposed
to ‘further the use of harmonized sanitary and phytosanitary measures
between Members’(726) and to ‘improve the human health, animal health
and phytosanitary situation in all Members’.(727) They are not imposed,
as is the case of the obligations imposed by Article XX(b) of
GATT, to
justify a violation of another GATT obligation (such as a violation of
the non-discrimination obligations of Articles I or
III).”(728)

596. The Panel in US — Poultry (China) observed that the
preamble of the SPS Agreement uses the word “elaborate” to qualify
the relationship of the SPS Agreement with Article XX(b). The Panel
noted:

“[T]he ordinary meaning of the word ‘elaborate’ is to ‘explain
something in detail’. Accordingly, when the preamble states that the SPS
Agreement elaborates the rules for the application of Article XX(b),
it is thus saying that the SPS Agreement ‘explains in detail’
how to apply Article XX(b). …

This is further confirmed by the wording of a number of provisions
throughout the SPS Agreement which either explicitly refer to Article XX(b)
or mirror relevant language in that provision.”(729)

597. The Panel reinforced its understanding of the relationship
between the SPS Agreement and Article XX(b)
by looking to the record of
the negotiations leading to the SPS Agreement. The Panel stated:

“The negotiating history of the SPS Agreement also appears
to confirm our interpretation. The Negotiating Group on Agriculture
established by the Group of Negotiation on Goods, sought to strengthen
the GATT rules and disciplines, in particular Article XX(b)
recognizing
the need to rely on scientific evidence for SPS measures.(730) This
strengthening of GATT rules and disciplines was to be done by developing
a set of principles that would govern the use of SPS regulations and
barriers.(731) In this sense, one of the purposes of the SPS Agreement
was to complement Article XX(b)
by providing specific provisions
that SPS measures must comply with in order to be consistent with Article XX(b).

We therefore conclude that the SPS Agreement elaborates and
thus explains the provisions of Article XX(b)
in further detail when
dealing with SPS measures. In the Panel’s view, this interpretation
gives meaning to both Article XX(b)
of the GATT 1994 and the SPS
Agreement in a harmonious manner.”(732)